'Measures to defend Zimdollar soon'

Government will soon announce a raft of measures to stabilise and defend the Zimbabwe dollar against emerging inflationary pressures, some of which are unwarranted as the economy is relatively in good health, President Mnangagwa has said.

In this week's instalment of his weekly column in The Sunday Mail, the Head of State and Government indicated that he recently convened a meeting with experts to map the way forward after a recent spike in prices of basic commodities and continued loss of value of the local currency.

"As already indicated, a raft of measures will be announced shortly, including measures to increase confidence in the local unit. De-dollarisation will be managed carefully to avert disruptions," he said.

"In the wake of last week's exchange rate turbulences and the resultant upward movement in prices, I met with my team of experts to analyse and review the current situation. To assist the process, we benchmarked our economy against several economies in our region and on our continent. Economies both larger and smaller than ours. The results were quite baffling."

He said it was worrying that while the country's economy was performing relatively better than its peers, the local unit remained volatile.

Kenya, which is East Africa's biggest economy, generated less foreign currency receipts than Zimbabwe last year, yet its currency remained stable.

"Economies which earn far less than us by way of exports; import more than us; have larger GDPs requiring more imports, and with bigger populations, are enjoying more stable national currency than we do. Kenya is a case in point.

"In 2021, our economy earned more than US$9,68 billion from exports. By contrast, the US$100 billion Kenyan economy earned US$6,74 billion for the same period. Our economy is a quarter the size of the Kenyan economy. We import far less than Kenya, while earning more from our exports than Kenya. Our population is less than half that of Kenya. Yet Kenya's currency is more stable than ours," he said.

Therefore, current currency volatility, he added, had nothing to do with economic fundamentals, as food and energy security was all but guaranteed owing to Government's ongoing programmes.

Zimbabwe has enough food in its strategic grain reserves to cover any grain shortfalls that might result from the mid-season drought that affected the 2021-2022 summer cropping season.

Completion of the Hwange Power Station's Unit 7 and 8 would also further inject 600MW into the grid. Further, Government continues to actively work to ensure that fuel, whose prices are being driven by the conflict in Ukraine, would remain both available and affordable.

President Mnangagwa urged business to act in good faith.

"As they say, it takes two to tango. While Government is doing all these things and a lot more, those in business must exhibit greater probity and show greater sense of responsibility."
He said Government's discipline and tight monetary policies should ordinarily sufficiently anchor the economy.

"We have pursued a tight fiscal policy, which has translated into a surplus position we have not had since Independence. Our reserve money has been kept at $28 billion. We are not printing money and have ensured our currency is supported by our reserves," he said.

"The $28 billion in reserve money is equivalent to US$116 million at current interbank foreign exchange rate of between $225 and $280 per United States dollar.

"Clearly, the financial fundamentals to support a stable domestic currency are in place. Yet this is not so, with our domestic currency becoming unstable lately."

He said it appears the local economy is running on sentiment more than actual fundamentals.
"…all our fundamentals are comparatively stronger, both when measured against our past and against sister economies in our region and on our continent."

Government will work hard to further nurture the growing trust and confidence in the Zimbabwe dollar, he added.