Zimbabwe govt departments warned for dumping Zimdollar

Finance and Economic Development secretary George Guvamatanga has warned government departments to desist from giving preference to clients paying for services in US dollars as opposed to local currency.

In a memo to heads of government departments and agencies, Guvamatanga said the de facto ban on the Zimbabwe dollar through pegging service fees solely in foreign currency was unnecessarily fuelling public resentment towards the local currency.

"In this regard, ministries, departments and agencies are required to observe the multicurrency regime by providing options to citizens on payment for government Services," Guvamatanga said.

"Instances where Government Ministries, Departments and Agencies show preference for the US$ when charging for services to the general public should stop forthwith as it is contrary to the current Government policy position.

"This general rule applies to all public institutions, except where explicit authority has been granted to charge exclusively in foreign currency."

The Zimbabwe government presides over a multi-currency system which has seen authorities peg an official exchange rate for the US dollar.

But the official rate is much lower than that offered by dealers on the parallel market.

Unstable local currency exchange rates have also seen business entities prefer the US dollar to cushion themselves from losses associated with goods pegged in a volatile currency.

Under Finance Minister Mthuli Ncube, Zimbabwe remains adamant the much resented local currency shall remain despite public pressure for authorities to dollarize and secure the value of bank balances.

However, a recent price surge which saw retailers peg prices based on a US$1: ZWL$4,000 has forced authorities into a raft of stopgap measures which include scrapping of duty on selected basic commodities.

The US dollar official exchange rate sits at ZWL$1,900 against the parallel market rate which stands as between ZWL$2,000 and ZWL$4,000.

Business entities accuse government of duplicity in administering the multi-currency as it has also pegged some services solely in foreign currency.

These include the Zimbabwean e-passport in which citizens are each required to part of US$120 to acquire the much-sought after document.

In a social media post, United Refineries Ltd CEO and former Confederation of Zimbabwe Industries (CZI) president Busisa Moyo blamed the crisis on continued lack of a single exchange rate in the country.

"Root cause = multiple exchange rates & the absence of a "formal & market accepted single exchange rate" for prices, incomes & wages. For Rand we know its ZAR19.30 but for the ZWL we have 4 rates causing arbitrage. We have gone on too long with this anomaly," Moyo said.