TREASURY boss Mthuli Ncube has pleaded with Zimbabweans to embrace the local currency for the country to achieve growth and stability objectives of National Development Strategy 1 economic blueprint.
“This, combined with other structural reforms underway, creates the necessary conditions for currency stability,” Ncube said in his Mid-Term Budget and Economic Review yesterday.
“The attainment of durable macroeconomic stability, combined with improved electricity supply situation is expected to spur economic growth above the projected 5,3% in 2023.”
Today, the Zimdollar remains highly volatile at US$1:$4 555,75 against $7 000 on the parallel market despite this being a general improvement from June.
Driving the money supply is government paying its contractors, followed by its huge wage bill and debt securities to finance its infrastructure spending.
“Going forward, macroeconomic stability is expected on account of recent bold interventions to close all sources of excess liquidity, favourable global economic environment, stronger financial regulation, as well as the enforcement of value for money principle in Government contracts,” Ncube said.
“Focus will be on consolidating the stability achieved so far by maintaining tight fiscal and monetary policies, while implementing measures to restore aggregate demand.”
He offered no reprieve for consumers who are facing a high cost of living owing to a 10% to 25% increase in US$ pricing last month.
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This is because businesses have been forced to reduce their local currency pricing owing to the Zimdollar gaining 30%, against the greenback, last month.
Consequently, businesses are now recuperating these losses by raising their forex prices.
However, the gain in the local currency against the United States dollar is still far behind the loss of value as the Zimdollar lost over 500% of its value against the greenback between May and June.
Ncube said the economy was projected to grow by 5,3% this year “on account of strong performance in agriculture (9,7%), ICT (4,9%), accommodation and food services (20,5%), as well as substantial improvements in the electricity supply situation, following the successful synchronisation and subsequent commercialisation of Hwange 7 and 8 units”.
He said the agricultural sector was initially projected to grow by 4% in 2023, but was now projected to expand by 9,7%.
“The total cereal production, excluding the winter wheat crop, is estimated at 2,6 million tonnes for 2023, 40% above the production levels achieved last year. Overall growth in the mining sector during 2023 is now projected at 4,8%, benefitting from increases in the production of lithium, chrome, diamonds and PGMs,” Ncube said.
He said the manufacturing sector was expected to grow by 2,2% in 2023 on account of a better agricultural season and measures being implemented by government to tame inflation and exchange rate volatility.
Over May and June, the macroeconomic framework put in place was around mopping up excess liquidity on the market.
It was revealed this week that money supply grew to $14,27 trillion at the end of June, over 500% from the December 2022 figures.
While the increase is largely reflected in the expansion of $10,97 trillion in foreign currency deposits, the balance of $3,3 trillion, in local currency, is nearly 228% higher than the December comparative.
