Minister of Finance, Economic Development and Investment Promotion, Professor Mthuli Ncube, said the Zimbabwean dollar would continue to be promoted and defended as it was crucial in enhancing the operations of some companies, especially in the cooking oil sector.
Responding to questions from journalists on the sidelines of the 56th session of the United Nations Economic Commission for Africa Conference of African Ministers of Finance, Planning and Economic Development held here, Professor Ncube said the government was committed to protecting the local currency despite its declining circulation. levels due to inflation.
At present, some economists say the local currency accounts for 20 percent of transactions while the US dollar accounts for 80 percent, and have made a strong call for the elimination of the local currency.
“We have a local currency and we have every duty to protect and promote it,” Professor Ncube said.
“It allows us to conduct proper monetary policy. We need all the tools to manage the macro economy. And obviously we should support that local currency.
He added: “In our policies that we will announce, there will be policies to enhance the use of the local currency. “This is a constant, (the Zimbabwean dollar) will always exist.”
Some companies, especially in the coal and agricultural sectors, have previously raised concerns that using the US dollar as a transaction currency increases their operational costs and makes their products uncompetitive in export markets.
Professor Ncube admitted that some sections of the private sector have benefited greatly from the use of the local currency.
“These are the facts because they have been able to compress wages, allowing their gross margins to increase on the back of falling real wages.
“That’s what the numbers tell us. (Some companies) have been able to improve their competitiveness. So, the local currency has benefited some parts of the economy, especially our manufacturers.
“I have seen how competitive the cooking oil sector has become. It is almost a direct product of the currency reforms we have done since 2019,” Professor Ncube said. “We did not have a strong sector then but now we have five or six players in the market and they are very competitive.” “.
When the government opened borders to allow the import of more essential goods when retailers were inexplicably raising prices, fewer bottles of cooking oil entered the country as prices remained competitive.
Professor Ncube said local cooking oil producers had become “very competitive” due to deliberate policies around currency reforms.
“I chose this sector just to show you the benefits of having a local currency. I am not saying that this is the only sector that has been supported.
“So, it is very important to always maintain the local currency regardless of whether trading is at 10% or 100%; it should always be there, and it should always be supported.
“But what is crucial is that it has to be stable, and once it is stable, it gives stability to everything and becomes a store of value, not just a transaction currency,” Professor Ncube said.
Turning to the expected monetary policy statement, Professor Ncube said it would be presented “in due course”.
“We said that we will issue a monetary policy (statement) through the Reserve Bank of Zimbabwe at the end of time, which will try to deepen this agenda of macroeconomic stability by first stabilizing the currency, then stabilizing its prices and then more generally, macroeconomic stability.
“So, please be patient, the monetary policy statement is on the way, once some issues are agreed upon. You know that the timing of policy change is crucial,” he said.
Professor Ncube said President Mnangagwa issued a statement on the direction of the economy, explaining that the direction “is actually a matter of stability, and then the pillars to support that will be announced in the monetary policy statement.” Announce
