PRESIDENT Emmerson Mnangagwa has bemoaned the resurgence of the parallel market, which he says is threatening the recently introduced Zimbabwe Gold (ZiG), adding that corrective measures will be instituted to protect Zimbabweans from economic disruption.
The Reserve Bank of Zimbabwe (RBZ) last Friday devalued the ZiG to 24,3 per United States dollar from 14, with the parallel market pushing further the rate to more than 35.
In his State of the Nation Address during the official opening of the second Session of the 10th Parliament of Zimbabwe in Mt Hampden yesterday, Mnangagwa said currency stabilisation was at the core of macro-economic stability, adding that the adoption of the ZiG in April this year was an important step towards stabilising the domestic currency anchored by gold and precious metal reserves.
“It remains the duty of all of us to respect and abide by measures and instruments intended to maintain economic stability and tame inflation. In response to the increased foreign currency pressures and in a bid to deepen the foreign exchange market, the Reserve Bank allowed for greater flexibility under the willing-buyer willing-seller arrangement,” he said.
Mnangagwa said the increased flexibility on the foreign exchange market was expected to further promote effective price discovery and encourage holders of foreign exchange to participate in the willing-buyer willing-seller market.
“Government remains committed to backing the currency through setting aside 50% of royalties for building reserves. Foreign currency inflows from exports have increased from US$7 billion in 2023 to US$8 billion in 2024,” he said.
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“Our country’s banking sector is on sounding footing, with sufficient capital and liquidity buffers, while profitability, asset quality and liquidity matrix have also remained stable.
“However, we note with concern the resurgence of parallel market activities driven by speculative tendencies. Corrective measures are being instituted to protect all Zimbabweans from economic disruption.”
The President said Zimbabwe’s strength lay in unity in diversity as he called on for social cohesion.
“Tendencies that fuel discord based upon perceived, regional and tribal differences, as well as social and economic hierarchies have no place in our nation and must be rejected,” he said.
Mnangagwa, however, also bemoaned the El Niño-induced drought, which has constrained growth across all economic sectors, particularly the agricultural sector.
“The Grain Marketing Board has established agro-shops, mainly in rural depots, as part of a raft of measures to ensure food availability, at more affordable prices,” he said.
“A new record wheat harvest of 600 000 metric tonnes is projected from the 2024 winter crop. This is a result of our unity of purpose and effective policy frameworks. We remain optimistic in respect of the 2024–25 summer cropping season, with projections of normal to above normal rainfall in most provinces.
“Water harvesting remains critical to climate change mitigation and adaptation towards complementing rain-fed production systems. The full utilisation of small dams and weirs as well as conveyancing around the bigger dams is top priority to my administration.”
Mnangagwa said under Bilateral Investment Promotion and Protection Agreements, the Compensation Committee had approved 94 claims for compensation.
“This demonstrates government’s commitment to fair and amicable resolution of matters with all partners. Peaceful coexistence in our region, the African continent and globally, is an essential ingredient for sustainable socio-economic development,” he said.
Meanwhile, economic analyst Stevenson Dhlamini applauded Mnangagwa for reassuring the nation and investors of the government’s commitment to a market-determined exchange rate which allays any fears that may breed negative speculative tendencies.
“Investors and the market needed the reassurance of a commitment to a more flexible exchange rate system,” he said.
“Also the presentation of a positive trajectory of export earnings is encouraging to investors as it is part of measures to support currency stability.
“Overall, the Sona emphasised policy coherence and consistency which is a very welcome development.”