Quarterly taxes, which are due next month, will force businesses to sell a quota of their products or services in ZiG because the central bank will not be able to supply all the ZiG that they want as they will be compelled to pay half their taxes in local currency.
Deputy Finance Minister David Kudakwashe Mnangagwa said that the government could not force providers like fuel dealers to sell fuel in ZiG. They already have the option to do so but they prefer US dollars.
Mnangwa said that 85% of the transactions are in United States dollars and only 15% in ZiG.
“The structure that we have for our currency only covers the 15% of the currency in circulation, which means that even if we desired, there is not enough ZiG in circulation to support these transactions,” Mnangagwa said.
Zimbabwe has only $80 million worth of ZiG in circulation. Taxes will contribute up to $300 million but the government requires that half of this be paid in ZiG.
“What the fiscal authorities are doing is making sure that as we go through a de-dollarisation plan and roadmap, it is done in a way that does not cause chaos in the markets.
“You will find that over the next few weeks, over the next few months, there will be certain taxes that will strictly be in the ZiG as opposed to optional, and eventually this is how we get to a de-dollarisation plan.”
Mnangagwa said the fuel suppliers and those issuing passports will have to find ZiG to pay their taxes next month.
“Come next QPD, they will have to look for 50% of their taxes in ZiG. It will not be sustainable for them to continue going to the interbank to look for ZiG to pay their taxes. So, it is eventually through a market-driven process (that) they will find themselves having to charge at least a certain quota of their services and their products in ZiG and local currency,” he said.
“It will allow the mix between the United States dollar and the ZiG in an organic and market-driven way to increase without creating scarcity and chaos in the market.”
Q & A:
HON. SEN. PHUTI: Thank you for the opportunity Mr. President. Why can we not have passports since the money is valued on the dollar? Why can the money not be able to buy all these items which are important?
THE ACTING PRESIDENT OF SENATE: Hon. Minister, if you have been following up, can you respond?
HON. D. K. MNANGAGWA: Mr. President, the translation was faulty, but I could pick up a few points. If I could rephrase the question just to make sure I captured it right. I would think the Hon. Senator was asking whether ZiG would be able to pay for some of the essential services such as fuel, passports and air tickets. If not, it then creates a problem for some because they are unable to access the foreign currency. I am not sure if that was the full import of the question. I may need further translation.
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