By Owen Mandovha
ECONOMISTS have rallied behind the recent measures announced by treasury to increase the usage of the Zimbabwe dollar saying it will result in the stabilisation of the local currency..
The major highlight of treasury’s measures announced last week was offering companies the option to pay royalties, taxes and duties in local currency.
Economists, who spoke to ZBC News this Sunday noted how the move will enhance demand for the Zimbabwe dollar, adding that this should see the local currency gaining more value.
“The move by Treasury is a step in the right direction to shore up the Zimbabwe dollar usage especially reducing the burden on exporters to pay the 40 percent surrender requirement and taxes in foreign currency and that is going to stabilise the pricing system. Even other taxes that were paid in foreign currency will be paid with the local currency which is going to see the increased demand for the Zimbabwe dollar,” said an Economist Happy Zengeni.
“In terms of royalties,mining companies sat on huge Zimbabwe dollar balances but at the same time were required to pay their royalties in foreign currency. Now,if they have the option the pay these in the local currency it reduces the demand for foreign currency on the auction and spur the demand for the Zimbabwe dollar,” added another Economist Persistence Gwanyanya.
Confederation of Zimbabwe Retailers President, Mr Denford Mutashu explained how this will impact on price and exchange rate stability.
“The challenge was to do with business having big Zimbabwe dollar balances but with few point of transactions for the local currency and that drove activity on the parallel market. This move will obviously contain inflation and the value of the Zimbabwe dollar,” he said.
Treasury’s move seeks to nip in the bud the confidence deficit that had weighed down on the stability of the Zimbabwe dollar since its introduction four years ago.
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