Staff Reporter
Government’s recent decision to reverse the Value Added Tax (VAT) on gold deliveries has been met with cautious optimism by economists and industry experts.
In an exclusive interview with this publication economist, Persistence Gwanyanya, outlined the potential economic benefits of this policy shift, particularly for Zimbabwe’s gold-backed currency.
“By removing the VAT, Government effectively lowers the cost burden on gold producers. This encourages higher production levels as miners can retain more of their earnings, thereby increasing overall output,” Gwanyanya stated
Gwanyanya highlighted the significant implications for Zimbabwe’s gold-backed currency.
“A robust gold production directly supports our currency’s value, as the gold reserves underpinning it become more substantial. This VAT reversal can enhance the credibility and stability of our gold-backed currency by ensuring a steady and reliable supply of gold.
“With stronger gold reserves, the country’s currency gains greater resilience against market fluctuations, contributing to economic stability and investor confidence. This stability is crucial for maintaining the trust of both domestic and international stakeholders in the gold-backed currency system,” Gwanyanya added
Gwanyanya emphasized the importance of a robust and sustainable gold production system for long-term success of the gold-backed currency.
“The government should implement strategies that ensure the sustainability of gold production, such as investing in mining technology and infrastructure, and fostering a conducive environment for investment in the gold sector,” he advised.
Another renowned economist, Gibson Nyikadzino also outlined the impact on Zimbabwe’s gold exports.
“Removing VAT on gold deliveries improves the competitiveness of our gold on the international market. This can lead to an increase in gold exports, positively affecting our trade balance and bolstering foreign exchange reserves.
Increased exports generate more foreign currency, which is vital for the country’s economic health, especially in paying for imports and managing debt obligations,” Nyikadzino added
The reversal of VAT on gold deliveries marks a significant policy shift aimed at revitalizing Zimbabwe’s gold industry and strengthening its gold-backed currency.
Additionally, this policy change is expected to invigorate the gold sector, making it more attractive for investment and enhancing its contribution to the national economy. Increased production not only supports the gold industry but also has positive ripple effects on related sectors, fostering broader economic growth.
