Home
About
Contact
Register
Login
Generate
WhatsApp Message
*Finance Minister Urges Immediate Policy Actions To Reduce Risk Of Exchange Rate Instability* *Follow Pindula on WhatsApp for daily new updates* https://whatsapp.com/channel/0029Va84dngJP21B2nWeyM3v?lg Finance Minister Mthuli Ncube has emphasised the need for immediate policy actions to mitigate the substantial risk associated with the instability of exchange rates. In his 2024 Budget Strategy paper released last week, Ncube highlighted the impact of such volatility on revenue collection, expenditures, debt service, and budgetary pressure caused by inflation resulting from exchange rate depreciation. Ncube said: ---------- Latest itel S24 available on Pindula: 128GB storage, 4GB RAM $119 USD WhatsApp: +263715068543 Calls: 0772464000 Buy Online: https://www.pindula.co.zw/market/itel-s24-128gb-22-20240426142756795795/?s=wanews ---------- > Exchange rate volatility has been a major source of risk in the recent past, affecting revenue collection, expenditures and debt service, particularly for those items denominated in foreign currency. > To the extent that exchange rate depreciation feeds into domestic inflation, thus generates pressure on prices on the budget. In the absence of policy interventions, a 1% depreciation of the Zimbabwe dollar against the US dollar widens the fiscal deficit by about 0,1% of GDP (gross domestic product). > Government will continue to strengthen the value for money audits measures and plug loopholes in the existing procurement systems to ensure that MDAs (ministries, departments and agencies) are not overcharged in respect of payments for goods and services as well as regulate the market, having observed that some of the suppliers or contractors were manipulating the foreign exchange market. According to the World Bank, Zimbabwe’s economy was valued at US$20.68 billion at the end of 2022, indicating that a 1% exchange rate depreciation could lead to a fiscal deficit widening of approximately US$20.68 million. Ncube further explained that the government had implemented various measures to address the risk, including weekly wholesale foreign currency sales to commercial banks. He stated that the medium-term expenditure framework aimed to limit spending to available resources and maintain the fiscal deficit below 3% of GDP. The Treasury set a budget deficit target of ZW$2.3 trillion (US$504.85 million), equivalent to 1.5% of GDP, for 2024. Ncube highlighted the challenge of a rising wage bill and commitments to foreign currency-denominated expenditures, which crowded out funding for social sectors and infrastructure development. Wages, procurement, social needs, infrastructure spending, and climate shocks were identified as major government expenses that could increase further if the local currency depreciated. Ncube pledged to implement value-for-money programs, increase transparency in the wage bill, adhere to the approved budget, and penalise overspending. The recent fiscal and monetary measures aimed to stabilise the foreign exchange market and align formal and informal exchange rates by addressing excess liquidity and promoting local currency usage. Ncube mentioned the increase in money supply as a cause of local currency depreciation and emphasized the importance of tax administration initiatives to enhance compliance and revenue collection. The government also planned to review concessions and contracts and adjust fees and charges to improve revenue collection. *More Pindula News* _If you found this article useful_ *Please support Pindula by forwarding to friends and groups*
Copy to clipboard
Feedback