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"Removal Of Import Duty On Groceries Will Expose Local Industry And Drain Forex"

9 months agoSun, 14 May 2023 10:23:15 GMT
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"Removal Of Import Duty On Groceries Will Expose Local Industry And Drain Forex"

Renowned economist Gift Mugano has commended Treasury for allowing businesses to keep 100% of their locally generated forex revenue.

Speaking to The Standard, Mugano a professor of economics, however, said the removal of import duty on 11 selected products will expose the local industry while draining foreign currency from the country. He said:

The move by the government to open the borders for basic commodities under the argument that they want to push improvement and availability of basic commodities; I don’t think it’s a good one.

It clearly exposes our local industry and it becomes a significant drainer of foreign currency because we are allowing unrestricted draining of foreign currency to import goods.

My view on this: I think the government is being emotional about the current price spike.

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The tragedy is that the price hikes will continue because local manufacturers will be forced to charge Zimdollar and United States dollars in the shops as required by law, but those who are going to import commodities, particularly cross border will not charge in Zimbabwean dollars.

This will further deepen dollarisation and use of United States dollar because they need foreign currency to be able to go back and import again.

According to The Standard, the Zimbabwean dollar fell to $2 700 against the United States dollar from about $1 200 a week ago.

But officially, during the same period, the Zimbabwe dollar fell to $1 222.27, against the greenback.

The depreciation of the local unit has led businesses to increase prices to preserve the value of goods and services, thereby making a recent 100% salary increment for civil servants meaningless.

In fact, some commentators say civil servants were better off before the salary increment in April than they are at present as far as their earnings in local currency are concerned.

More: Pindula News

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