Zimbabwe has decided to deal with black market pricing decisively because it is dealing with the operation of an underground economy which has got the potential to totally destabilise the country’s economy.
This was said by the Deputy Minister of Finance Clemence Chiduwa in Parliament yesterday in response to a barrage of questions after issuing a ministerial statement on the introduction of Statutory Instrument 127 of 2021 which compels business to use the official foreign currency auction rate for pricing and not the parallel market rate.
Dzivaresekwa legislator Edwin Mushoriwa had asked Chiduwa why the government was punishing those with free funds- that is foreign currency they obtained through their own means either through exports or through remittances.
“The question from Hon. Mushoriwa was that why would the Government want to punish those with free funds and also that were enough consultations done. Hon. Speaker, what we are dealing with here is the operation of an underground economy which has got the potential to totally destabilise the Zimbabwean economy,” Chiduwa said.
“The use of free funds; it is something that we allowed as financial authorities and we did not sanction that free funds should be used for illegal activities. If you checked, there is no way we can have a country where there are no parallel markets.
“However, it is the degree of premium that gets policy makers to be worried. I remember making a presentation here where I said, ‘what is critical for Zimbabwe is stability’. There was stability in the parallel market and there was stability in the official markets.
“As long as there is stability, the economy is good to go but the moment we realise that there was a movement from 1:20 in the parallel market to 1:40. Surely that movement was not as a result of economic fundamentals. Therefore, there was need for us to ensure that there is stability in the exchange rate market.
“The parallel market is operating because people are looking for USD. Why would somebody with USD now want to go to the market to look for ZWL? If we are saying they want the USD to use them for importation, if they have got free funds, they can use them directly for importation. However, the moment the free funds are now going to the parallel market and you see that the rates that are being charged are far way from what we expected in terms of international best practices…(we intervene)…”
Full statement and Q &A
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