FINANCE minister Mthuli Ncube said last week’s devaluation of the ZiG currency by almost 44% was a result of a new policy by the Central Bank and measures were being drafted to compensate those affected.
Ncube, however, urged Zimbabweans to accept that some policies put in place by the RBZ can sometimes harm the economy.
The Treasury boss was responding to questions from the media on how the government would deal with income losses incurred by individuals and businesses as a result of the ZWG’s devaluation. He spoke after President Emmerson Mnangagwa’s State of the Nation Address (SONA) in Parliament this Wednesday.
Ncube said the government is now working on making adjustments to civil servants to cushion them against the devaluation of the local currency.
“That act of putting in place a flexible exchange rate of devaluation does have an immediate impact on incomes and prices.
“As the government, on our part, we will make some adjustments to civil servants’ salaries so that their income is restored.
“We will make sure that we empower the salaries, not in full but to make sure that somehow the salaries are restored,” Ncube said.
He however said not everyone who lost their money due to the devaluation of the ZWG will be compensated.
“There is bound to be pain, some impact and that is what happens with any new policy, it can have some negative impact and this is what has happened with this policy.
“We will, however, make some adjustments to make sure that those who lost can somehow be compensated but it will not be everyone,” added Ncube.
“We as a government, we are determined to stabilise the macroeconomic environment, so that the environment can support the growth of our economy.
“So the action taken by the Reserve Bank of Zimbabwe was actually to produce a package (0:19) of measures. (0:20) Those measures included adjusting the currency from about 14 to 25 to the US dollar.
“It also included raising the policy rate to 35% because the idea is that you want to discourage speculative demand for credit, for speculation in the power market”.
According to Ncube, the other measure put in place by the Central Bank was to increase the reserve requirement for both domestic as well as foreign loans.
“You can see that, but also they restricted the amount of money that anyone could just take out of the country.
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“It’s just to stem the outflow of money. So what the Reserve Bank put in place was a package of measures to deal with the issue of currency stability.”
He added: “Now when it comes to the issue of allowing the exchange rate to move to 25 as an official exchange rate, the intention there was to make sure that the gap between the power market and the official market was somewhat narrowed.
“This was also presenting other challenges for the retailers. I spoke to some of the retailers. They’ve been consulting with government, with the line ministry, with the Ministry of Commerce, with the Central Bank, with the Treasury,” stated the Minister.
He explained the gap between the official and parallel market rates was causing challenges and that gap had to be closed.
“So, on that score, it’s good that that gap was closed and it brought some relief to retailers. We continue to look at other measures to make sure that that gap doesn’t run away and continue to give us challenges when we come into the field.”
(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
