Time for corrections –Newsday Zimbabwe

Zimbabwe’s gold

FINANCE, Economic Development and Investment Promotion Minister Mthuli Ncube says the government will pay most taxes and fees in Zimbabwe Gold (ZiG) to boost the use of the six-month-old currency.

ZiG, which debuted in April, had found its feet until the last two months, when authorities slept on the wheel.

Monetary authorities were forced to devalue the local currency on September 27 by 43% to 24.39 ZiG per dollar.

Speaking at a dialogue with development partners in Harare on Wednesday, Ncube said the government would require taxpayers to settle a significant proportion of their obligations in local currency.

“Customs duties are already payable in local currency. Going forward and in line with the dedollarization roadmap, other taxes will also be paid exclusively in local currency, including payment for government services,” Ncube said.

The move aims to create demand for ZiG, thereby stabilizing the exchange rate.

At the launch of ZiG, central bank chief John Mushayavanhu said there would be demand for the currency as companies settle their quarterly tax obligations.

No legislation created this “rush” for ZiG and the second quarterly payment date went unnoticed on June 25, when companies paid 25% of their corporate tax.

The third quarterly payment date was September 25 and no such request was made.

In fact, demand for the greenback increased, triggering a ZiG rout, forcing authorities to intervene two days later.

Authorities have issued mixed messages on the use of ZiG, despite the existence of a dedollarization plan that would establish ZiG as the single currency.

In formal channels, ZiG usage is increasing, from 20% in April to 40%.

While monetary authorities are encouraging the use of ZiG on the one hand, the government appears to have adopted a different tone on the other after allowing wheat farmers to be paid exclusively in US dollars.

Critics say the move shows the government is paying lip service to the use of a local currency.

We are of the opinion that the government should take the initiative to use ZiG.

Although some services can be paid in ZiG at government offices, there have been complaints that officials say point-of-sale machines are not working, forcing one to pay in US dollars.

ZiG is supported by $450 million in foreign exchange reserves, as of October 10, according to Reserve Bank of Zimbabwe Governor John Mushayavanhu.

Critics say government services such as passport fees should be paid exclusively in ZiG to reinforce the use of the local currency.

The government, however, argued that there is an arrangement that requires taxes to be collected in US dollars.

We urge the government to walk the talk on its plans to strengthen the use of local currency.

Mixed signals are coming against the government’s sixth attempt to establish a stable currency in more than a decade.

This is the last chance to put things right after the mistakes made over the past six months, if ZiG is to have a chance in a context of accelerated re-dollarization.

American author and speaker John C Maxwell said that “a man must be big enough to admit his mistakes, intelligent enough to profit from them, and strong enough to correct them.”

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