(Last Updated on September 19, 2022 by ZIMDAILY EDITOR)
We know we are in the election season when the Zanu PF government starts lauding itself over non-existent economic improvements.
The latest self-praise comes from the Treasury, the Reserve Bank of Zimbabwe and other government officials that prices of basic goods are coming down as a result of the Zimbabwe dollar “stabilising”.
This is because the greenback used to sell for as high as $1 000 in the local currency on the parallel market, but has since settled around $800 after tighter fiscal and monetary measures.
The measures put in place by Treasury and monetary authorities include suspending payments to government suppliers, a 120-percentage point bank interest rate hike to 200% and doubling the capital gains tax to 40% on stocks sold before 270 days. Other measures introduced were selling gold coins in local currency and using Zimbabwe dollar balances to service the huge forex auction backlog.
The effect of these measures has been to significantly reduce Zimbabwe dollars on the market which in turn has led the local currency to seemingly “stabilise” on the parallel forex market, a feat which critics warn is temporary because the government still has to honour its obligations to suppliers.
Well, if we go back to our economics, there has been significant demand for the United States dollar as it is a more stable currency.
This is because the economy has seen low activity as a result of poor consumer spending, power cuts, foreign currency shortages, water shortages, unfriendly business policies, corruption, low business and consumer confidence and high taxes, to name a few.