With the Zimbabwean dollar on the ropes with rate spike after rate spike, the Zimbabwean government is getting desperate. The latest measures meant to shore up the value of the local unit, the Zimbabwean government seeks to punish those who would withdraw USD from their accounts. According to the government, those withdrawing USD are using the cash to fuel the black market, depriving the government of IMT tax and are “economic hitmen”.

To stop this the government is now going to increase the current fixed level which is less than US$0.05 per transaction to 2%. This means that if you receive a Nostro transfer you end up paying about 6% to the government alone in taxes before the bank even gets its cut. Below is the statement from President Mnangagwa on the issue.

Foreign currency cash withdrawal levy

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There is a preference to withdraw foreign currency for transaction purposes, thereby undermining IMT collections, given that cash withdrawals are not liable to IMTT.

In order to discourage the withdrawal of cash which is traded on the parellel market, the cash withdrawal levy for amounts above US$1 000 will with immiediate effect, be reviewed from the current 5 cents per transaction to 2%.

President’s speech on this specific issue

Now, will this bring about the demise of the black market? Probably not. Quite the opposite in fact. It will be additional proof that the government cannot be trusted with your money. They will change the script on you so fast and wipe some of the value of your banked money with the stroke of the pen for no good reason other than the fact that they can.

In any case, those who trade on the black market are quite adept at factoring in such policy changes into their transactions. They will probably just soldier on with new fees shaping the rates they offer. Also, it will mean even fewer people will be inclined to bank their money as putting money in the bank is now as good as losing a good part of it.