Zimbabwe has announced a 5 year dedollarisation roadmap

Source: Zimbabwe has announced a 5 year dedollarisation roadmap – The Zimbabwean

Zimbabwe has announced a 5 year dedollarisation roadmap detailing how the economy will transition over the period. A fixed and dual exchange rate system will immediately be adopted. The USD will be permissible for settlement of local transactions over the 5 yr period.

[ ] • Payment of salaries in foreign currency for expatriates and NGOs Permissible from 2020 -2024
[ ] Payment of salaries in foreign currency by local companies (e.g. Econet and Bata) to local employees Up to 50% paid in foreign currency at the discretion of the employer(2020). Up to 40% paid in foreign currency at the discretion of the employer (2021). Up to 30% paid in foreign currency at the discretion of the employer(2022) Up to 20% paid in foreign currency at the discretion of the employer(2023) Up to 10% paid in foreign currency at the discretion of the (2024).

[ ] Payment for goods and services in foreign currency using free funds . All goods and services in the country chargeable in local currency and payable in local currency or foreign currency using free funds .(2020 -2022) After 2022 All goods will be charged in Zwl and Payable only in zwl .
[ ] Fuel … In the case of fuel ZERA designated service stations there allowed to charge in foreign currency and also its payable in foreign currency (2020 -2024).
Non Zera designated stations to charge in
Zwl and goods payable in zwl.

[ ] Reducing export retention threshold RBZ will start only release 80%of exporters Funds in foreign currency .(2020) but will gradually cut it down upto (2024 ) to 25% and 15 % for every exporting company or individual.
[ ] • Disbursements of international remittances in foreign currency The practice should continue since these are Free Funds ( Mukuru ,western Union and world remit ).customer has right to choose between local currency and Foreign currency. (2020 -2024).

[ ] • Domestic FCAs/Nostro transfers (usd RTGS transfers ) permissible till 2024 .ie ecocash usd , bank transfers
[ ] Existing insurance policies in foreign currency .These contracts should continue to be honoured until their expiry periods.(2020). Payment of new policies in foreign currency optional as some policies like those for ZESA, Air Zimbabwe are in line with international best practice (2021- 2024).
[ ] Exchange rate policy Combination of Fixed and Dual Exchange Rate management system that takes account of economic fundamentals .(2020 -2021) .Managed flot rate system (2022 – 2024)

[ ] Disinflation programme (Price stability) Target annual inflation Reduce Annual Inflation from the current High 3-digit levels (540% in Feb 2020) to 2-digit levels (around 90%) by end-Dec 2020. Low two-digit levels (below 20%) Single digit levels (9% and below) SADC (3-7%) Its simply means the prices of goods are changing 540 percent upward but by end of 2020 they should be changing 90 times and upto 2022 they should be changing under 7% permissible in SADC countries.

[ ] • Levying of taxes and duties in foreign currency Maintain duty in foreign currency on non-essential and locally available imported goods such as fruits, cereals, vegetables, etc. Reduce the number of eligible goods and services to be taxed in foreign currency.(2020) Maintain duty in foreign currency on non-essential and locally available imported goods such as fruits, cereals, vegetables, etc.(2021). All Gvt levies, taxes and duties to be paid in local currency Hike tariffs on non-essential imports where necessary .(2022). All Gvt levies, taxes and duties to be paid in local currency (2023 -2024) .

[ ] • Exchange rate subsidies on fuel The price of fuel should continue to adjust in line with changes in the managed Fixed exchange rate (2020) . The price of fuel should continue to adjust in line with changes in the managed Fixed exchange rate (2021). No subsidy on fuel (2022 -2024).

[ ] • Exchange rate subsidies on electricity Any such subsidies must be contained within the announced 2020 budget. No subsidy would still be required when the economy adopts a unified exchange rate system. *(2021 -2024).
[ ] • Subsidies on agricultural commodities and other basic goods to be zero taxed on some basic commodities such as roller meal in order to cater for poor and vulnerable(2020) Implement a coupon system for the targeted. Any such subsidies must be transparent, and contained within the announced budget to be made available through coupons ( coupons to be given to targeted pipo to buy goods as lower price than all other unintended citizens ).
[ ] • (ZUPCO) Target subsidy on the public transport system Need to ensure that the subsidy is sustainable by fully accounting for its costs and benefits (2020). Reduce subsidy on the public transport system to 75% (2021 ) .Reduce subsidy on the public transport system to 50% (2021 ). Reduce subsidy on the public transport system to 25% .(2022) Reduce subsidy on the public transport system to 10% (2023 -2024) it means public transport in 2023 will be only 10%cheaper than private transport.

[ ] Promote private sector-led economy Begin streamlining Gvt interventions and role in the economy. Promote private sector-led economic revival strategies. (2020 -2023) .Limit Government role in the Economy (2024).
[ ] Promote infrastructure development through cost-recovery and Public-Private Partnerships (PPPs) Infrastructure (water, power, road, rail, etc) is a missing link in the economy’s growth and development nexus. (2020) Increase Capital Budget to 20% of total expenditures (2021 ). Target to increase Capital Budget to 30% in line with COMESA guidelines (2022). Efficient and enabling infrastructure .(2023 -2024) capital expenditure is money used to build infrastructure and repair existing ones such as roads and airports .
[ ] The Government is seeking to have Formalised economy which is currently 60-70%inform to leave it at 80 %formal by 2024 .Means it should create Jobs that will employ 80% of workforce by 2024 either in public or private sector .

NOTES KEY SUCCESS FACTORS

This de-dollarization strategy is anchored mainly on exchange rate and price stability, which can only be achieved in the medium term. In addition, the following factors are also key for the success of the plan: • Political support; • Policy consistency and credibility; • Effective communication; • Building business and consumer confidence; and • Implementation of the measures as a package.

Source :De-Dollarisation document (2020April)
Simplified by Zicosu Communication department Midlands state University @2020 Executive.

COMMENTS

WORDPRESS: 1