The Reserve Bank of Zimbabwe and the banking sector are coming up with the nuts and bolts of interest payments on demand deposits to encourage people to deposit money in banks, rather than bury it under their pillows, RBZ Governor Dr John Mangudya told a Parliamentary committee this week.
Dr Mangudya told the Parliament’s portfolio committee on Finance, Budget and Economic Development that RBZ had finalised consultations with the Bankers Association of Zimbabwe and would soon be able to make the required announcement.
The committee, chaired by Buhera Central MP Dr Mathew Nyashanu (ZANU PF), wanted to know what the Reserve Bank was doing to compel businesses to deposit takings in banks instead of keeping it under their pillows.
“We are working on incentives together with the Bankers Association of Zimbabwe to encourage people to make deposits. We shall soon be making the necessary announcement. We will be paying interest on those that deposit money in banks to encourage people,” said Dr Mangudya.
Dr Mangudya said the RBZ assessment was that most people used alternative methods rather than banking their money in order to preserve value of their money. So the bank wanted incentives for depositors.
Turning to the general economy, he said the future of the economy was good given this year’s bumper harvest and the fact that inflation has been tamed. Banks were in good shape and the currency and exchange rate were stable.
“We are in the right direction to achieve National Development Strategy 1. Dams are full. The future is looking bright for Zimbabwe. Farmers and industry are doing well. We continue to pray that we continue to work as a team. Our strategy dovetails with Government aspirations,” said Dr Mangudya.
When called, Zimra acting Commissioner General, Mr Rameck Masaire said tax compliance by businesses was not pleasing and he wanted people to have a culture of voluntary tax compliance. “Tax compliance is at 33 percent versus an ideal position of not less than 70 percent. The 70 percent is the international benchmark,” said Mr Masaire.
Zimra was now buying drones to help defeat smuggling and was keen to get scanners but budgetary constraints remain a challenge.
Zimra had requested an annual budget of $5 billion but was allocated $2,5 billion while it asked for US$38 million but was allocated around US$4 million to cover foreign currency requirements.