Economist and former Reserve Bank of Zimbabwe (RBZ) advisor, Eddie Cross, says the Government should open up the market for forex exchange in order to tackle parallel market exchange rates that are hurting the entire economy.
The black market exchange rate is currently hovering around US$1:ZWL$200, which is almost double the official exchange rate that was pegged at US$1:ZWL$108 when the last foreign currency auction was conducted on 14 December 2021.
Cross said the prevailing exchange rate could be benefitting a lot of businesses and forex traders but the depreciating Zimbabwe dollar renders civil servants’ salaries worthless. Said Cross:
We have a definite problem and, in fact, in my view, this is the major issue, which confronts the Ministry of Finance in 2022.
The only way to collapse what they term BMR (black market rate), is in fact to open up the market for forex exchange and increase the volume of foreign currency being traded.
While the prevailing exchange rate could be benefitting a lot of businesses and forex traders who are likely to frown upon the move, the net effect is negative to the entire economy as it tends to render workers’ salaries useless.
Already, public sector workers are itching and lobbying for forex payments citing inflationary pressures, which erode their purchasing power.
Some banks are not in favour of that and the majority of businesses are making so much money out of the totally distorted situation.
So much that they do not want any changes to be effected. The Ministry of Finance has a very tough job on its hands because they virtually have to decide what is best for the country with the approval of the powers that be of course.