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Finance Ministry Tells Companies To Stop Charging Govt Using Parallel Market Rates

1 year agoWed, 31 Aug 2022 07:29:00 GMT
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Finance Ministry Tells Companies To Stop Charging Govt Using Parallel Market Rates

Finance and Economic Development permanent secretary George Guvamatanga has told government suppliers to stop charging the government for goods and services using the parallel market exchange rate.

He told Parliament’s Public Accounts Committee (PAC) on Monday that many companies are fleecing the government by overpricing their goods and services. He said:

At the moment, we have an issue of overpricing by service providers and contractors, some of you members might not have been too happy with me over hotels’ pricing. I am not happy with the way most hotels are charging government.

The pricing that has been given to government is extortion, we should not accept these extortionate prices. It should come to a stop, our budget as government is not in parallel market pricing. Charge us fairly.

He then gave an example of one Harare hotel where Members of Parliament (MPs) were last Friday charged ZWL$168 000 per night for a US$120 room. The hotel was reportedly using a rate of US$1:$1 400.

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Some context:

i). The parallel market rate is higher than the official market rate as the latter is approximately half of the former.

ii). Businesses have been preferring the parallel market rate to cushion themselves as the Zimbabwe dollar has been losing value against the United States dollar and other currencies.

iii). The use of parallel market rates will result in the government overstretching its budget. The Finance Minister, Professor Mthuli Ncube recently announced a Mid-term Budget Review. 

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