The Sunday News
Sunday News Reporters
IMPORTING United States dollars is expensive to the Government hence people must embrace bond notes as a way of preserving the foreign currency reserves in the country, a Cabinet Minister has said.
Finance and Economic Development Minister Patrick Chinamasa said this on Friday, about a week before he presents the 2017 National Budget whose tone is expected to shape the economic path the country will take at a time it has introduced the use of bond notes.
“We have had to import US dollars from America, we have actually had to use money in the nostro accounts to pay for the importation of physical cash,” said Minister Chinamasa.
He said the country should not abuse the US dollar which he said must not be used to buy trinkets and “cheap useless” things but goods and services that are necessary to push the economy forward.
“Pano unototenga mazhanje, ipwa, mbeva ne US dollar (you buy mazhanje, sweet reeds and mice with the dollar) and things like that, it has never happened anywhere. The measure that we have introduced is to move away, the only way we can make US dollar available in this country is through exports. That foreign currency is hard earned foreign currency and should not be used to buy useless things when you get it,” said Minister Chinamasa.
He said through the introduction of bond notes, the Government was moving away from an overly liberalised foreign exchange market to one which is managed.
“We have set out our priorities on the usage of foreign currency that we earn. The bond notes are coming to support the goose that lays the golden egg. We are going to support exporters through issuance of bond notes,” he said.
Minister Chinamasa said it was surprising that workers in the country were crying to earn US dollars yet they were not exporting anything.
“It’s not yours (US $) because you did not make it but if you are an exporter you are in a special category and we are going to be supporting exporters in order to boost the availability of US dollars in our economy. As we go forward you shall observe a quicker turn around in our economy because we are starting to do the right thing. Bond notes can only be used to circulate and as a medium of exchange locally thereby preserving the hard earned foreign exchange which is the US dollar,” he said.
Minister Chinamasa said the introduction of bond notes into the market had gone well although teething problems were being faced, but were being sorted out.
The issue of how the country will move forward comes as civil servants eagerly await to hear if there is a concrete affirmation from the Government on payment dates of bonuses. Last year by November, the Government had started paying bonuses for some civil servants, while some got it this year.
Although Minister Chinamasa refused to shed light on the issue of bonuses, her counterpart Public Service, Labour and Social Welfare Minister Priscilla Mupfumira said there was nothing yet to report on the issue of bonuses.
“At the moment there is nothing, we will notify you of the dates or any other development concerning that issue,” she said when interviewed last week.
Meanwhile, as the nation anticipates the budget, various sectors have called on the Government to ensure that the budget speaks to the needs of the people and the economy. Zimbabwe Teachers Association chief executive officer Mr Sifiso Ndlovu said there was a need for the budget to table issues that will improve collection of revenue and subsequently result in prompt payments of their salaries. Over the past few years, the Government has shifted pay dates for civil servants citing problems in raising the money.
“The first thing we want on the demand side of the budget is to be assured that there will be continued payment of salaries on time. We also want it to support employment of more teachers so that we have enough. If you check the pupil to teacher ratio, it’s ridiculously high at one teacher to 65 pupils which is basically two classes. On the supply side, we encourage the Government to improve on the Ease of Doing Business so that it would be easy for companies to operate,” said Mr Ndlovu.
Confederation of Zimbabwe Industries president Mr Busisa Moyo said the Government should consider adopting the South African rand as its “reference currency” instead of the dollar starting with presenting the National Budget in the neighbouring country’s currency.
“We expect Minister Chinamasa to issue the budget in rand to encourage the use of more competitive cost environment and benchmarking of country prices,” said Mr Moyo.
He also said the budget should look at introducing deep cutting austerity to control fiscal expenditure such as salary reductions, weaning of parastatals into commercial entities and cutting of expenditure on non-productive assets such as luxury vehicles.
“Appropriate funding for agriculture will be key as well as companies involved in import substitution under Statutory Instrument 64/2016 and other measures to protect local industry. We also expect to get an update on the plans to rectify the country’s debt position according to the Lima Plan,” said Mr Moyo.
Zimbabwe Federation of Trade Unions secretary for economic affairs Mr Jacob Rice said the budget should aim at addressing the plight of workers and create conducive environment for businesses to operate.
“On the workers perspective we expect the budget to be pro-poor. We expect that the focus be on the Ease of Doing Business so that we may keep the small workforce that is there. The budget should also be able to incentivise companies that are operational in the country. We should not lose companies to closure,” Mr Rice said.
He said there was a need for the Government to assist in funding strategic companies to enhance their capacity utilisation.
“With the coming of the bond notes which is meant to benefit exporters, there also should be focus on other companies that are struggling. There isn’t much that we are exporting when actually companies are continuing to close. The only thing that we are exporting is skilled labour that the Government should make sure that we don’t lose and how best can we return skilled workforce,” said Mr Rice.
Association for Business in Zimbabwe chief executive officer Dr Lucky Mlilo reiterated Mr Rice’s sentiments stating that the country’s policies should be growth oriented.
“We would want the National Budget to assure and pave way for policies that encourage development and growth of the country’s economy. The policies should enhance both domestic and foreign investment. We have noticed that the conditions are even harsh for locals to invest. The country’s taxing regime is also astronomical. In that same vein there is 10 percent withholding tax the Minister (Chinamasa) talked about which the Zimbabwe Revenue Authority seems not to know about as Government’s implementation arm. These uncertainties don’t augur well with business,” said Dr Mlilo.
Zimbabwe Federation of Trade Unions secretary for economic affairs Mr Jacob Rice said the budget should aim at addressing the plight of workers and create conducive environment for businesses to operate.
“On the workers perspective we expect the budget to be pro-poor. We expect that the focus be on the Ease of Doing Business so that we may keep the small workforce that is there. The budget should also be able to incentivise companies that are operational in the country. We should not lose companies to closure,” Mr Rice said.
He said there was a need for the Government to assist in funding strategic companies to enhance their capacity utilisation.
“With the coming of the bond notes which is meant to benefit exporters, there also should be focus on other companies that are struggling. There isn’t much that we are exporting when actually companies are continuing to close. The only thing that we are exporting is skilled labour that the Government should make sure that we don’t lose and how best can we return skilled workforce,” said Mr Rice.
Association for Business in Zimbabwe chief executive officer Dr Lucky Mlilo reiterated Mr Rice’s sentiments stating that the country’s policies should be growth oriented.
“We would want the National Budget to assure and pave the way for policies that encourage development and growth of the country’s economy. The policies should enhance both domestic and foreign investment. We have noticed that the conditions are even harsh for locals to invest.
The country’s taxing regime is also astronomical. In that same vein there is 10 percent withholding tax the Minister (Chinamasa) talked about which the Zimbabwe Revenue Authority seems not to know about as Government’s implementation arm. These uncertainties don’t augur well with business,” said Dr Mlilo.
