The Zimbabwean dollar has been on another accelerated downward spiral in the past few weeks. While the black market rate has been around $410 ZWL per 1 USD in the capital Harare in areas like Mazowe and Zvishavane the rate is reported as high as $450 ZWL per 1 USD. This has sparked alarms in both the public and in government and recently President Mnangagwa announced some urgent measures meant to shore up the flailing local unit. Most importantly these measures seem different from those recently announced by the RBZ with some of the president’s measures meant to address an important fundamental-confidence in the banking sector and in the Zimbabwean dollar.

Below is a quick summary of some of these measures. We will also publish a series of articles looking at some of the novel announcements he made and their likely impact on the economy and the public at large. You can also click on the download button below to download a full PDF of the president’s speech on the issues covered:

  • Like RBZ governor Mangudya the president acknowledges that the public’s confidence in the banking sector is very low due to the past policies with 2008 looming large on everyone’s mind every time they think about taking their money to the bank or keeping their savings in ZWL instead of USD. A lot of people would rather save their money in USD creating high demand for USD.
  • The speech refers to the currency changeover of 2019 which resulted in people losing money in their banks as Zimbabwe officially introduced the ZWL dollar. In 2019 the government scrapped the multi-currency system and foisted the ZWL dollar on all of us. That was a terrible way to introduce the ZWL especially given the fact that the government had promised time and time again before this that they would not do anything like this.
  • The government has promised to compensate anyone who lost their money as a result of this changeover. As promised we will look at this in a detailed article.
  • The president acknowledged that the foreign currency auction has become a pale shadow of it’s 2020 self with backlogs hurting ts reputation. He has promised that from now on, the auction will be settling bids within a 14 day period which is much better than the current situation were bids can go for as much as 3 months without being settled. However, this is much longer than the 2 day settlement period companies were promised back in 2020.
  • The government will continue with the current dual currency system with the Zimbabwean dollar as the preferred means of settlement in Zimbabwe although local usage of the USD will still be permitted.
  • The willing buyer willing seller system recently introduced by the RBZ will now be used to discover what rate the auction system should use. Hitherto the auction system has been nothing but a rigged system designed to siphon money from exporters at sub-economic rates.
  • The willing buyer and willing seller limits have been lifted from the current US$1 000 to US$5 000 per day with a US$10 000 per individual per week
  • Retailers are now allowed to use the average willing buyer willing seller rate to price their goods. They are allowed to use a rate of around 10%+- the average rate.
  • There will be no more money printing apparently with reserve money growth now reduced to 0%. I will believe this when I see it
  • The government has now raised the IMT tax from 2% to 4% for foreign currency transactions. Talk about shooting yourself in the foot. This will not dissuade foreign currency transactions as the government expects. It will just make even more people not want to bank their money.
  • Willing buyer willing seller transactions shall be exempt from this IMT tax.
  • Withdrawals of foreign currency above US$1 000 will now attract a levy of 2% tax up from the current 5 cents per transaction.
  • ZIMRA will now be using the interbank willing buyer willing seller rate when calculating tax obligations involving foreign currency and ZWL dollars. To be honest ZIMRA had already been doing this for the most part anyway.
  • The same rate shall be used when exporters surrender their foreign currency. This is probably going to boost the rigged official auction-rate which had remained low until now.
  • Third party country payments are no longer allowed.
  • Banks no longer allowed to lend money
  • Restrictions have been placed on Zimbabwe Stock Exchange traders and brokers in terms of how they can move money around.
  • Capital Gains Tax on shares held for less than 270 days has been raised to 40% up from the current 20%. That’s the same as the current Pay As you Earn Tax without the AIDS levy thrown in.
  • The RBZ’s Financial Intelligence Unit will be on the prowl and imposing civil penalties on anyone violating the law.
  • ZUPCO’s monopoly on the public system is scrapped and buses and kombis can now be imported duty-free

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