The Zimbabwe dollar (ZWL) is massively deteriorating against the US dollar particularly in the parallel markets since the beginning of 2023. The resultant galloping inflation which is now independently estimated above 700% has prompted policy response from authorities. The first set of economic measures to stabilize the economy was introduced in early May 2023. And on the 29th of May 2023, Treasury introduced another set of measures to stabilize the economy. This column, therefore, seeks to analyze the likely impacts of some of the key latest measures announced by the Treasury.

1. Promotion of Use of ZWL

In a bid to promote the use of the ZWL in the economy, the Treasury announced that all Government Agencies including Parastatals will now substantially collect their fees in local currency, payments to ZESA by non-exporters will be made in ZWLs, and all customs duty to be payable in ZWLs except for designated or luxury goods and circumstances where the importer opts to pay in foreign currency (forex).
The policy stance is highly commendable as it signals the government’s confidence in its own currency and helps shore up demand for ZWLs. As demand increases, the ZWL will regain and sustain its value against the US dollar (USD). This will help save the ZWL which at the moment is on the verge of total collapse and market rejection. In May 2023 alone, the local unit erased nearly 40% of its average parallel (alternative) market value as it slid from ZWL/USD 2200 in April to ZWL/USD 3600.
In year-to-date (YTD) terms, the ZWL has lost a staggering 75% of its value in alternative markets which is only two (2) percentage points lower than a 77% decline registered in the entire 2022. These numbers show that the ZWL is failing to perform its store of value function. As a result, economic agents are dumping ZWLs in the market as soon as they earn them. So, by increasing tax revenue collected in local currency, demand for ZWLs will be created as economic agents liquidate USD holdings to pay their dues to the taxman.
However, for durable ZWL stability to be realized, the policy must be fully implemented and be buttressed by other measures inter alia promotion of fiscal transparency across all tiers of government, sustainable (within limits) fiscal spending, tight monetary policy, efficient & effective public service delivery, and a flexible exchange rate regime which is key in attaining uniform market exchange rate.

2. Sterilization of Excess Liquidity

Treasury will continue to sterilize excess liquidity already injected into the economy through issuances of Treasury Bills (TBs) whilst the Reserve Bank of Zimbabwe (RBZ) will continue to sterilize through appropriate monetary policy tools. Sterilization is an action taken by authorities to counter the effects on the money supply caused by their interventions in the foreign exchange markets.
This policy move is key as it seeks to address the root cause of ongoing ZWL instability and pricing madness – excessive ZWL liquidity growth in the market. For instance, the latest RBZ statistics show the ZWL component of broad money (M3) spiking unsustainably by 12.8% in March 2023 to ZWL1.32 trillion from ZWL1.17 trillion in February 2023. From a year-on-year (YoY) basis, this ZWL component of M3 grew by a staggering 324% from ZWL312.22 billion recorded in February 2022. These statistics provide evidence that there is excessive ZWL liquidity in circulation in the economy.
However, it remains to be seen if there will be adequate political will, especially in an election year to cut on burgeoning fiscal spending. Also, because of limited due diligence in public procurement processes & procedures, Treasury is making unjustifiably huge ZWL payments to government suppliers and contractors who in turn offload these balances in the parallel markets.
Fiscal spending is also rising as government supports winter wheat farming, attempts to cushion public servants, engages in unproductive election-linked expenditures, and anchors the 2023 Agric marketing year funding grain purchases from farmers by the Grain Marketing Board (GMB). If some of these expenditures are not cut, liquidity will remain high thus exerting pressure on the exchange rate to depreciate.

3. Monetary Policy Tightening

Treasury announced that RBZ will tighten monetary policy in order to reduce lending and hence money creation by banks. This policy may include hiking RBZ’s policy rate – a short-term reference rate at which commercial banks can borrow money from RBZ. Considering the status quo of increased liquidity in the market, hiking the Bank’s benchmark policy rate will help discourage speculative borrowing by banks as well as other demanders of loanable funds. For this policy to yield results, there is also a need for tight monetary targeting by RBZ to ensure that the rate at which the money supply is growing is in tandem with the rate of growth of economic activity in the real sector.
Also, Treasury announced that it will now fund the ZWL component of 25% foreign currency (forex) surrendered by exporters and will now collect all forex surrendered to service foreign currency loans assumed from RBZ. This policy move will help reduce quasi-fiscal operations (QFOs) by RBZ thus clamping money supply growth. Before, the RBZ was unsustainably printing ZWLs to purchase forex from tobacco farmers and exporters.
For instance, April 2023 merchandise exports stood at US$555 million and a quarter (US$138.8 million) of these exports were ceded to RBZ at the official rate (US$1: ZWL1047.44) as per the existing export surrender requirements. This means that roughly ZWL145.3 billion was printed and injected into the system in April 2023 through the purchase of USDs from exporters alone. With the value of exports expected to remain elevated throughout 2023, money printing to buy forex is unsustainable and fuel market instability.
However, it is going to be a daunting task for Treasury which is already facing a very limited fiscal space to raise ZWLs to buy forex surrendered by exporters. The funds were not budgeted for in the 2023 budget and there will be likely a low uptake of Treasury Bills (TBs) issued as they usually carry a coupon rate that is way below inflation. As such, there will be likely a high ZWL payments backlog leading to high exchange rate losses for exporters. Also, for a nation facing debt distress, the move by the Treasury risk collapsing public service delivery which is already being crowded out by burgeoning debt repayments. So, to eliminate this and other associated risks, the export surrender requirements must be discontinued.

4. Finetuning Exchange Rate

Treasury announced that weekly auctions will be limited to a maximum envelope of US$5 million and that all winning bids shall be paid within 24 hours of award. This, coupled with the pre-announcement of the available weekly auction envelope will help fast-track convergence of the interbank and auction exchange rates as it increases bidding competitiveness as well as subdue chances for insider trading.
While this may help improve the efficiency of the auction market, it remains my view that this system must be completely disbanded as it is breeding exchange rate multiplicity and rent-seeking behaviors. Also, the continued use of a priority list on the auction exerts moral hazard thus influencing how people put their bids.
More so, Treasury announced that all exporters’ forex proceeds that remain unutilized after 90 days will be liquidated onto the interbank market. Of this, authorities are trying to reduce the opportunity cost of idle forex balances. In theory, this will increase business investment, production, and productivity.
However, forced liquidation of forex proceeds will likely promote “pillow/mattress” banking and externalization of funds. As such, instead of forcing the liquidation of export forex proceeds after 90 days, authorities should disband the auction system and fully liberalize the interbank market. This is because to increase market efficiency including pricing of the ZWL, all market actors – public and private – must at least be subjected to the same market conditions.

5. Assumption of RBZ Debts

Treasury will assume all foreign currency debts from RBZ on 1 June 2023 and create a debt redemption fund to service other external liabilities in line with the arrears clearance program. These will be funded through new levies and other resource mobilization initiatives. Also, going forward all public foreign currency debt will be contracted solely by the Treasury. The move seeks to clear the RBZ balance sheet to allow the Bank to focus on its primary mandates of maintaining price, currency, and financial market stability.
While limiting state borrowing powers only to Treasury is a welcome development that will positively contribute toward debt sustainability, the bypassing of parliament in this process makes the debt assumption unconstitutional. This validates my opinion that the Zimbabwe Parliament only exists for ‘rubberstamping’ executive decisions which are against its oversight role of asserting the system of checks and balances of power and defending citizens’ interests. It is also standard practice to conduct comprehensive debt audits before debt assumptions to ascertain and eliminate the possibility of assuming odious and illegitimate debt.

6. Gold Traceability System

Through Fidelity Gold Refinery (FGR), the government will introduce a system to manage the traceability of gold from its origin, both from commercial and small-scale producers. This is key because gold production tracking & monitoring will minimize the chances of gold leakages and illicit trading.
Also, traceability measures help in curbing criminality as information such as the exact source of gold, holder of gold buying license, and amount of taxes paid on gold exports can be collected and analyzed. The prevailing rampant illicit flows must be reduced as they are militating against the accumulation of gold reserves which are crucial in supporting the value of both the ZWL and gold e-cards recently introduced by RBZ.

Branton Matondo

Mutare is not holding back in dominating the national gospel arena as Caroline Chidzikwe and The Throne Worshippers look forward to launch an album featuring Dorcas Moyo this week.
From the melodious sounds of Dorcas Moyo, Blessing Shumba, Jairos Mutabikwa, Mutare is relishing on another massive album launch, for yet another thriving talent pitted for Courtauld Theater.
The album, titled ‘Mwari Munoshamisa’ is the second project for the Mutare based budding artist Chidzikwe.
Having worked with Bethany Pasinawako in her previous works, Chidzikwe looks determined to keeping up her tempo.
In an interview with TellZim News Chidzikwe said the album is a clear testimony of how powerful God can be in our lives.
“Mwari Munoshamisa is an album that tells a story pinned on the greatness of God in our lives. Normally when I’m writing these songs I will be referring to my life. There are some things that are not meant for us but the almighty Lord just opens the gates for us,” said Chidzikwe.
The main song on the album is a collaboration by gospel diva Dorcas Moyo titled Mwari Munoshamisa.
“We really thank God for the album because it’s not an easy task. The album obviously features Dorcas Moyo who is a source of inspiration in my career so far,” added Chidzikwe.
The album launch will be taking place June 10, 2023 with supporting acts from Blessing Shumba, Melanie Fidze, Pastor Ellen Anderson, Terence Dzatsata, Pastor Clever Dzvairo, Prince Jacha, Petronella Mukanganwa, Vimbai Dimba and Ruth Alfredo.
“Tickets will be going for USD 3 for kids, USD 5 for Adults and we have a special USD 10 ticket for the corporate world and stakeholders who would assist in supporting this night. The launch will take place between 11:00hrs and 17: 00hrs,” cited Chidzikwe.
Chidzikwes took a massive leap in 2019 after the release of two singles titled ‘Zvosiyana’ and ‘Mutsvene Mutsvene’.
She then went on to work on her first album with Harare based gospel artist Lyton Ngolomi, an album that featured Bethany Pasinawako.
The six tracked album included a massive hit titled Zvinoda Mutsimba, a track that attracted airplay on Diamond Fm.

Perpetua Murungweni

Susan Chikwanda from Zaka has applied for a declaratory in terms of section 14 of the High Court Act Chapter 07:06 that seek to change the decision of the Ministry of Primary and Secondary education and the announcement by ZIMSEC to subsidize examination fees for 2023.
In her application Chikwanda states that she is not financially stable and she is a mother to four children, the other two being Panashe Masingwini (17) and Honest Masingwini (14) are the ones sitting for public examinations November this year. Panashe is a form 4 student at a private college and Honest is in grade 7 at Munjanja Primary School.
“I am not gainfully employed and in order to finance my children’s education needs that includes school fees, uniforms, stationary and examination fees, I do piece jobs using my scotch cart. I carry water, firewood and also do menial jobs like cleaning so that l can get some resources and the resources are not enough and l sometimes end up having to borrow some money so that my
Chikwanda is claiming that the effect of this decision to subsidize examination fees for public schools and exclude private schools means that for Honest who is in grade 7, he will benefit from the subsidy whilst Panashe who is in form 4 will not benefit.
“My two children both come from the same home and are financed from the same less privileged and economically weak pocket. Besides that Honest is at a Government school and Panashe is at a private college there is nothing else that differentiates their economic and social status. Both my children eat from the same plate and are clothed for school from the same basket,” said Chikwanda.
Chikwanda said that Panashe is doing 8 subjects and the total examination fees required by ZIMSEC will be USD $ 190 and she does not afford that amount of money and she has to reduce the number of subjects for her child.
“I have had to choose that Panashe writes only 5 subjects which l understands are the mandatory minimum subjects required for an Ordinary level pass because I have not managed to raise USD $190 and I have had to borrow some money so that he writes 5 subjects which will cost me USD $ 120.
“If Panashe was going to benefit from the subsidy, l would have been paying USD $88.00 for all 8 subjects he is studying. If Panashe is to fail to succeed in one subject then he would have failed to achieve the minimum required to be considered to have acquired the mandatory Ordinary level pass in Zimbabwe’” said Chikwada.
She also claims that, that the money the Government is using to subsidize the examination fees is however coming from the same fescues that all citizens pay taxes, when benefits are being extended, and the government has also failed to provide a justifiable reason behind the different examination fees amounts between government schools and private schools..
“The Government has made a decision to benefit Honest by subsidizing his exam fee but have Panashe pay the full examination fee. Yet the money that the Government is using to subsidize the examination fees for candidates in public schools including mission schools is coming from the same fiscus that all citizens pay taxes into. When tax is collected there is no question asked regarding which school ones child attends.
“Government has also not provided the rationale behind this differentiation and l have tried to find a possible justifiable reason but l have failed. I have concluded that the differentiation amounts to unfair discrimination on perceived class and also on economic or social status.
“However, this is not a fair discrimination and cannot be justifiable in a free and democratic society which has the rule of law and constitutionalism as its tenets of justice. Such unfair discrimination inadvertently results in candidates like Panashe who are in private college’s right to education being affected,” added Chikwanda
In a circular dated 26 January 2023, the Zimbabwe Schools Examination Council issued out finance circular number 3 of 2023. In the circular ZIMSEC stated that the fees for grade seven examinations for 2023 are USD $ 65 for all subjects. It further stated that Government would contribute USD $ 36 of the examination fee for candidates in public schools while parents and guardians will pay USD 29.00. The circular further stated that all candidates from private schools and colleges will meet the full cost of USD $ 65 as examination fees for the year.
In another circular dated 31 January 2023 ZIMSEC through finance circular number 1 of 2023, announced that Government will be subsidizing the 2023 Ordinary and Advanced level examinations fees for candidates in public schools, local authority schools and mission schools. The circular further stated that all candidates in private schools and colleges, including private candidates in public schools will pay the full cost of examination fees. The circular stated that candidates in public schools would pay 45% of the examination fees per subject and Government would pay 55% of the examination fees per subject.

Beverly Bizeki

A woman from Chivi has written an emotional poem as a way of thanking the disability inclusive parenting programme that has been implemented in Chivi District.
Felix Mapuvire is one of the many parents who have had a wakeup call on disability inclusive parenting model for parents of children living with disabilities with the coming in of the programme.
In her poem Mapuvire refers to UNICEF as ‘chirera nherera’ which means the one who looks after orphans.
“Our children living with disability have since been acceptable in the society now and parents are now able to bring out their children in the society which they could not do previously,” reads the poem.
Mapuvire in her poem also acknowledged the efforts to get documentation for the children living with disability.
“Children living with disabilities are now going to school and they now have national identity documents as well as birth certificates,” says Mapuvire.
Mapuvire said the disability inclusive programme has enabled them to treat their son as a normal person and not a sick person.
“Before the coming in of the program, we treated my child who has intellectual challenges as a sick person rather but after being taught in the programme on parenting for children with disabilities, my son is now able to do household chores he even helps out in our pfumvudza plot,” says Mapuvire.
Mapuvire is one of the many parents from Chivi district in Masvingo whose child is one of the 321 beneficiaries of the Disability inclusion parenting program spearheaded by the Ministry of Public Service Labour and Social welfare in collaboration with UNICEF with funding from Government of Sweden, Government of Norway, (Norad) and Swiss Agency for Development and Cooperation working with implementing partner Zimbabwe Parents of Handicapped Children Association.
The program which was implemented in August 2022 and is carried out in five wards in Chivi, has seen the realization of rights of the children living with disabilities by parents as the program is meant to build the capacity of carers.
Beauty Magwidi one of the parents said the program has helped her in taking care of the child that was left behind by her niece to accept as well as love the children living with disability.
“With UNICEF we have been taught to be self-reliant through doing personal projects, we have also been taught to love our children and there has been a great change even in their well-being, I am now able to play with my child, she can move and pick things as well as smile,” said Magwidi.