SENIOR STAFF WRITER
The World Trade Organisation (WTO) has commended ongoing efforts by authorities to stabilise the country’s currency and economy, the Daily News reports.
This comes as the Zimbabwe dollar has lately been holding steady against major global currencies, following the Reserve Bank of Zimbabwe’s (RBZ) launch of the foreign currency action system in June — which has stabilised the prices of most basic goods in the country.
Speaking during the recent online review of Zimbabwe’s trade policies and practices, WTO Trade Policy Review Body chairperson Harald Aspelund commended the government’s efforts to stabilise the local currency.
“Members commended Zimbabwe’s efforts to stabilise its currency, noting that the forex regime should not act as a disincentive for investors and exporters.
“Accordingly, they welcomed the introduction of a weekly forex auction by the Reserve Bank of Zimbabwe in June 2020, and they sought information regarding further measures to ensure that the forex market operates in an open and transparent manner.
“This could contribute to bringing down inflation from its currently high levels, and improving the business environment, in particular for Small to Medium Enterprises (SMEs), and the balance-of-payments.
“Several members called on Zimbabwe to reduce state ownership, to improve the governance of state-owned enterprises, and to further tackle corruption,” Aspelund said.
Since the launch of the action system, the Zimbabwe dollar has moved from 63 to the US dollar to the current 81 — while prices of basic goods and services have been stabilising in shops after a bout of steep increases fuelled by the collapse of the local currency against the US dollar.
RBZ governor John Mangudya recently said Zimbabweans could look forward to a more stable economy going forward.
“The exchange rate is gradually stabilising. All bids have been between 80 and 88 for the past three to four weeks. The average is vacillating within that ruler. The ruler is now defined between 80 and 88 and this is not far from the parallel market rate, which is around 82 for cash and 90 for transfers.
“The RBZ’s focus is on price stability. To achieve this we have come up with a two-pronged approach which is about exchange rate management and monetary supply management.
“On the exchange rate the key focus is to ensure that Zimbabweans use a formal exchange system. We want to make sure that it is sustainable,” Mangudya said.
Meanwhile, Aspelund further said that member states had welcomed Zimbabwe’s commitment to undertaking economic reforms aimed at macro-economic stability and addressing structural issues.
“They (members) deplored the Covid-19 pandemic that is exacerbating the severe impact Cyclone Idai has recently had on the Southern African region, including Zimbabwe, and encouraged the latter to continue to pursue its reform agenda, perceived as the most appropriate approach to stabilise its economy.
“Zimbabwe’s repeal of its indigenisation provisions was appreciated, bringing an end to the 49 percent foreign ownership cap in all sectors.
“Some members raised questions regarding measures to dismantle remaining investment restrictions, ensure investment protection and repatriation of dividends, and to eliminate remaining provisions prescribing the degree of export orientation of investment proposals,” Aspelund said.
He added that Zimbabwe’s ratification of the Trade Facilitation Agreement (TFA) was good, with member states encouraging the country to take appropriate measures to align its regimes to the relevant provisions of the agreement.
“Several delegations commended Zimbabwe on its active participation in trade negotiations, including the African Continental Free Trade Area (AfCFTA) and the Tripartite Free Trade Area between COMESA, EAC and SADC, in addition to concluding an EPA with the European Union,” he said.
THE World Trade Organisation (WTO) has commended ongoing efforts by authorities to stabilise the country’s currency and economy, the Daily News reports.