Editorial Comment

Confidence in our local currency crucial

FINANCE minister Mthuli Ncube last week said the government had managed to tame the parallel market and in turn stabilise prices of goods with more measures lined up to cushion the lives of ordinary citizens.

This comes after experts warned that the intensifying power cuts would soon result in sharp spikes in the prices of basic goods, as both producers and retailers turn to overpriced alternative sources of power.

There was a growing sense of panic in the market that the gains from the stability seen in the economy over the past 12 months would all come to nought.

All these fears were certainly not unfounded as the parallel market edged $200: US$ with unscrupulous businesses cashing in on arbitrage opportunities.  

Some businesses were even unjustifiably increasing prices in US$.  

As if this wasn’t enough, global inflation pressures on foodstuffs and gas were also contributing to the price increases.

 But now, with the authorities implementing Statutory Instrument 127 to deal with market indiscipline to make sure that companies and individuals comply with the law in terms of pricing, access and allocation of foreign currency, there is a semblance of relief.

As we approach the festive season, authorities ought to intensify measures aimed at building confidence in the local currency outlined by central bank governor John Mangudya in his monetary policy statement earlier this year.

There is a need for the gap between the official and parallel market rates to be addressed.

We were encouraged by the indications that the Reserve Bank of Zimbabwe is busy with the matter as the official exchange rate is now more reflective of the market dynamics.

It is also crucial that the central bank’s monetary targeting framework be religiously adhered to. We cannot afford to upset the balance in monetary supply. On that note, all government spending should be kept in check.    

The recent announcement that civil servants would receive their 13th cheque in US dollars raises concerns about whether this would not put pressure on the Treasury, but then again, a delicate balance has to be struck to cushion the long-suffering workers who have committed their lives to service.  

After all, the resultant increase in consumer spending will bring some cheer to the retailers and manufacturers in a quarter that would have been otherwise subdued.