Zimbabwe should take steps to sterilize excess liquidity without compromising national savings and market confidence because the monetary and fiscal policies it announced last month have brought the economy to a disequilibrium.
This was said by one of the country’s largest companies, Delta Corporation, which controls the beer and beverages industry in the country.
Delta is partly owned by the world’s biggest brewer Annheuser -Busch InBev.
The company which admitted having an “exceptional” performance in the six months to the end of September said it was not enough for government to acknowledge the fact and pronounce policy changes but to show commitment and take steps to correct the situation.
“The country needs to live within its means and to implement business friendly policies to deliver the Zimbabwe we all want,” it said.
Zimbabwe announced new monetary and fiscal policies on 1 October which saw the reintroduction of foreign currency accounts and a two percent tax on transactions of $10 and above up to a maximum of $500 000.
The policies backfired with prices skyrocketing as the rate of the surrogate currency, the bond note, plummeted against the United States dollar though officially they were supposed to be at par.
Though this was outside Delta’s reporting period, it said the fiscal and monetary policy pronouncements had thrown the multi-currency framework into confusion.
“In addition the 2% transaction tax took both business and consumers by surprise, raising policy risks and undermining market confidence,” it said.
“Government and regulators are urged to engage stakeholders ahead of major policy pronouncements in order to maintain market confidence.”
Delta welcomed the government’s intention to cut down expenditure and reduce borrowings on the domestic market.
“The realisation by government that excessive dependence on borrowings is not sustainable is a welcome development. The company will continue to act in a manner that is supportive of the reform agenda as announced by government,” the company said.
It said it would focus on capturing growth opportunities despite the risks and the shortage of foreign currency which continues to disrupt the smooth operations of its businesses.
Despite the shortage of foreign currency which slowed the Chibuku and soft drinks businesses, Delta said consumer demand was firm due to increased economic activity in mining and agriculture, expansionary fiscal and monetary policies and the election related spending.
“Operating income increased by 73% over prior year driven by a 54% increase in lager beer volume and a buoyant Chibuku Super contribution in the Sorghum beer category,” the company said.