Mthuli Concedes To RTGS Devaluation

FINANCE minister Mthuli Ncube yesterday told the Senate that the official exchange rate will soon match parallel market levels and hopefully destroy completely the black market after the RTGS dollar’s value fell to 1:3 on the interbank market during the week.

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Ncube was responding to a question by Mashonaland Central Senator Angeline Tongogara, who had asked to inform the House on government policy and measures being taken to curb the foreign currency black market, which she said was currently destabilising the economy.

“What we have done so far is to complete the monetary policy reforms announced on February 22 and the introduction of the market-based exchange rate and designation of the RTGS dollar as local currency,” Ncube said.

“In the last few days the exchange rate has gone up to 1:3 to the US$ and we have made sure that there is a market-based exchange rate whose behaviour approaches the black market, hoping that with time the black market will be eliminated,” he said.

Ncube said the black market was currently also showing signs that there was a shortage of foreign currency in the country.

“I am sure as we trade in tobacco that the black market will diminish. We want to see a Zimbabwe which does not have a black market,” he said.

Mashonaland Central MP Alice Chimbudzi asked the Finance minister to explain the measures being taken to deal with businesses which are demanding payments for goods and services in foreign currency.

Ncube said businesses were entitled to ask for payment in foreign currency as the country was still a multi-currency regime, but said they must rate the prices using the obtaining official exchange rates.

“We are still in a multi-currency regime and so businesses are entitled to demand payment in foreign currency. The RTGS dollar is a unit for accounting purposes, but we cannot say that other currencies are disallowed. Maybe what businesses have to do is to be fair and to convert to the official rate of 1:3, but they are allowed to quote in foreign currency,” he said.

Bulawayo Metropolitan Senator Gideon Shoko also asked Ncube to state measures being taken by government to prevent high price increases as witnessed before and after the increase in fuel prices in January 2019.

“We are trying everything we can to deal with inflation, but I must hasten to say that year-on-year inflation has changed. Our prices will remain high up to October this year and after October, the year-on-year inflation will drop down because the difference will narrow. However, month to month inflation will keep falling. In February it was 1,7% and in March you will see that the figure will drop and I will not be surprised to see prices falling.

“For example, the price of top quality beef used to be $19 per kilogramme, but yesterday the price had dropped to $12. We are doing everything to curb the growth of inflation because we also need to preserve the value of our currency,” Ncube said.

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