Reserve Bank of Zimbabwe Governor Dr John Panonetsa Mangudya has lambasted the deliberate pricing of basic goods only in foreign currency as illegal and irresponsible by business which his central bank sacrifices and goes out of its way to supply them with the very foreign currency to keep their businesses afloat through the foreign currency exchange auction he introduced some 101 foreign currency auctions away since 2020.
“The unilateral action towards forex only pricing is not only against the country’s laws but deliberately frustrates promotion of the local currency, which is irresponsible pricing by businesses that benefit more from Government policy,”said Governor Dr Mangudya.
While acknowledging the lobbying for a return to full dollarisation, the Reserve Bank of Zimbabwe Governor Dr John Mangudya, with concurrence of the Treasury, also added that the country has no capacity to sustain such a model, pointing out that most development progress being registered in the economy is a result of using the local currency.
Governor Mangudya exclusively revealed to TechnoMag statistics showing, the local currency Zimbabwe Dollar (ZWL) accounts for “70 percent of domestic transactions with forex only accounting for the remaining 30 percent.”
Meanwhile to augment Governor Mangudya’s sentiments, Permanent Secretary in the Ministry of Finance and Economic Development, Dr George Guvamatanga recently said, “The development has prompted Government to revoke an import duty waiver for raw materials for Beitbridge Juicing Private Limited, a subsidiary of Schweppes Limited.”
Fiscal and Monetary Authorities enforced this following reports that the company was now selling its products exclusively in forex against the dictates of the initial agreement with the Government.
On 1 July, Treasury provided a once off suspension of duty facility for the company to import 10 000 tonnes of oranges and 5 000 tonness of grape fruits.
The provision was expected to augment local supplies thereby minimising supply disruptions as well as guaranteeing affordable prices to the general public, said Mr George Guvamatanga in a letter to the company’s managing director, Mr Charles Msipa.
“Treasury, however, notes that the pricing of your products is now exclusively in foreign currency, notwithstanding the Government’s initiatives to promote the use of local currency,” said Mr Guvamatanga.
Mr George Guvamatanga added
“You will be aware that beneficiaries of tax incentives are expected to complement the Government interventions with responsible pricing models with a view to ensuring affordability of goods, which is key in achieving Government development objectives.”
Mr Guvamatanga said pending investigation on the pricing model, Government had revoked the suspension of duty facility and as such all new imported consignments will immediately attract duty at prescribed rates.