Given the statistical reality of the Zimdollar availability, a “big bang” approach by Treasury involving exclusive Zimdollar demand for the half-year quarterly payment dates (QPDs) will shock the market.
Treasury expects to collect about $400 billion from the June QPDs, which are payable by the 25th of that month. Exclusive demand for QPD in Zimdollar is actually expected to result in a deficit of the Zimdollar in the market.
Following the transfer of external debt to Treasury, the payment mechanism for the 25 percent export surrender from the Budget does not pose risk of possible money supply growth from RBZ, as before.
Therefore, one should reasonably expect the market to liquidate their forex holdings to meet QPDs, as well as other statutory obligations.
We also expect reduced demand for forex on the wholesale market as Zimdollar conditions continue to tighten. Payment for utilities, mainly electricity, in Zimdollar is also seen as a major driver to demand. The Government recently enacted Statutory Instrument 93/2023, which compels electricity providers to charge non-exporters for electricity in the local currency.
Zimbabwe Electricity Transmission and Distribution Company (ZETDC) collects about $12 billion-$15 billion per month from electricity purchases.
Treasury has also directed all ministries, departments and agencies to religiously observe the multicurrency system, which entails acceptance of the Zimdollar for transactions. Some Government departments, ministries and agencies were accused of rejecting the Zimdollar for payments, directly or indirectly.
As they say, success breeds success.
The moment the market starts liquidating the US dollar, we shall see more voluntary liquidations happening.
This is what will get the market to equilibrium, which essentially means state of stability.
Going forward, the operationalisation of the digital gold tokens in the transaction space before month-end is seen as creating value for the Zimdollar in the domestic economy.
The value-preservation needs of the market, which are currently not met by both the foreign currency auction systems, will be taken care of by the digital gold tokens.
The reality of the monetary system shows us that a return to stability is possible.
However, this can only happen if the authorities resist any temptation to run the printing press, especially at this time when we are heading towards elections.
It will be prudent to tone down on infrastructure and attend to urgent needs of the economy today, such as health and education, as well as the general welfare of employees and citizens.
By Persistence Gwanyanya for the Sunday Mail
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