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Government To Extend ZiG Currency Crackdown To Shops

3 weeks agoFri, 17 May 2024 09:38:05 GMT
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Government To Extend ZiG Currency Crackdown To Shops

The Government plans to extend a crackdown that’s targeting street currency traders to retailers (shops) to ensure goods and services are priced using only the official exchange rate of the new ZiG currency.

Responding to questions from legislators during a National Assembly sitting on Wednesday, Finance, Economic Development and Investment Promotion Minister, Mthuli Ncube, warned that businesses caught pricing their products or services using an exchange rate higher than the official rate risk severe penalties.

Ncube said there is no longer any “basis” for shops to use any rate above the official rate after the government recently removed the legal provision allowing traders to put a 10 per cent margin above the ruling interbank exchange rate. He said:

We must protect our currency and keep it stable and discourage unnecessary speculation. The speculation is unjustified.

It is clear what the fundamentals are that drive value, that underpins the value of this currency and therefore it should be clear to everybody that this currency should be stable and an appropriate official exchange rate should be used for transaction purposes.

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In our desire to protect that, Mr Speaker Sir, we are putting certain measures, certain sanctions on those who deviate from that objective.

First of all, for those who are managing retail or own retail organisations and sell goods to the public, we are insisting as a Government that they ought to use the willing buyer-willing seller price for foreign currency as the basis for pricing.

We have removed any basis to deviate officially from the official exchange rate, that 10 per cent exchange limit was causing deviation as an excuse for overpricing purposes.

So, from now on, we will make use of the willing buyer-willing seller pricing mechanism and any deviation will be sanctioned through a fine of no less than ZiG200 000 per offence.

So, those are really the measures we have put in place to deal with the pricing by retailers.

The government gazetted Statutory Instrument 81A of 2024, Exchange Control (Amendment of Schedule to Exchange Control Act) Notice, 2024, last week.

S.I. 81A of 2024 scrapped the provision for a 10 per cent margin above the ruling exchange rate and also laid down the new requirement and the civil penalties that can be levied against defaulters.

Violation of the law now attracts a penalty of a minimum of ZiG200 000 per offence, and if the foreign currency taken in is higher in value, then the penalty equals that foreign currency.

According to Business Weekly, traders and open market foreign currency dealers are pricing the local currency between ZiG17,5/US$1 and ZiG20/US$1.

According to the Reserve Bank of Zimbabwe (RBZ) website, the average interbank rate on 17 May 2024, was ZiG13.39/US$1.

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