The multi-currency regime adopted in 2009 remains in place into the foreseeable future, while Government is committed to cutting expenditure and turning around the fortunes of perennially under-performing parastatals, the President has said.
In a statement yesterday, President Mnangagwa said a host of other fiscal imbalances seen as the root cause of the challenges facing the economy would be corrected.
“Further to my address on the need to accelerate economic reforms that are necessary to stimulate the economy, I have found it necessary to restate Government’s strong commitment to reducing fiscal imbalances which are the root cause of the many challenges the economy faces,” said President Mnangagwa.
“The challenges include cash shortages and the proliferation of foreign exchange parallel market rates which have a negative effect on prices.
“These challenges require that Government positions the economy on a strong footing by implementing painful, but necessary reforms that include cutting on Government expenditure, increasing efficiency on Government delivery systems and fast-tracking reforms of State Owned Enterprises, among a host of other measures.”
President Mnangagwa said Government would institute currency reforms once the implementation of the fiscal reforms has been completed and reiterated his stance that the multi-currency regime will remain in place.
“These reforms should be accompanied by a strong and sustainable currency reform system set to follow after the execution of the above reforms,” he said.
“This is necessary to ensure that any currency reform programme that the Government puts in place is effective, and causes minimum disruption to business.
“Accordingly, and in view of the need for an orderly currency reform programme that will be followed when the economic fundamentals are right to do, Government shall continue with the multi-currency system which it put in place in 2009.
“This system entails that foreign exchange earners are not prejudiced of their regulatory foreign exchange receipts, and that those who do not earn foreign exchange, but produce for the domestic market, access foreign exchange through the banking system as per the current policy on foreign exchange management system.
“I wish, therefore, to reiterate Government’s position as articulated in my State of the Nation Address that the country shall continue to use the multi-currency system of exchange for foreseeable future.”
In the Transitional Stabilisation Policy (TSP) launched last week, Government indicated its readiness to cut expenditure by reducing the consolidated public service wage bill.
The 2019/2020 national budget is expected to institute wage bill containment measures that will reduce it annually by about $200 million (0,7 percent of GDP) and $130 million (0,4 percent of GDP), respectively.
At the moment, Government has maintained a freeze on filling non-critical posts; enforcing retirement policy which saw some senior civil servants such as former Registrar General Mr Tobaiwa Mudede being retired; and adoption of lean administrative structures.
President Mnangagwa set the ball rolling by appointing a leaner Cabinet of 21 ministers. In terms of service vehicles, there is a proposal that officials who change departments within five years continue to use the same vehicle.
According to the proposal, vehicles can only be changed after five years or clocking 150 000km. Previously, Government officials would get new cars when they were moved to other departments.
Market watchers have proposed that Government should source vehicles for ministers locally to reserve foreign currency.
Government has also indicated that it will fast-track the privatisation of some parastatals to ensure they do not solely rely on fiscus for financing.
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