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Zimdollar shortage bites – Bulawayo24 News

THE government will today give an update on contracts it suspended last month pending a pricing review as pressure mounts for it to honour its obligations.

Last month, as part of measures to save the depreciating Zimbabwe dollar that hit a low of $1 000 against the United States dollar, the Finance and Economic Development ministry suspended government contracts pending a pricing review.

The immediate effect of this was to greatly reduce the amount of Zimbabwe dollars on the market, forcing parallel forex dealers to lower their rates.

Apart from the suspension, measures put in place to service the huge forex backlogs, local currency gold coin purchases, high bank interest rates, and a 40% capital gains tax on stocks sold before 270 days, significantly reduced Zimbabwe dollars on the market.

Resultantly, the Zimbabwe dollar dropped to $800, against the greenback, on the parallel forex market. However, the shortages are now so severe that consumers and businesses are struggling to access Zimbabwe dollars, affecting both livelihoods and business operations.

“Finance and Economic Development minister Mthuli Ncube will be hosting a Press conference (on September 19, 2022) to update the market on the ongoing validation exercise on subsisting government contracts which are being subjected to value for money audits,” read a note from the ministry dated September 16, 2022.

The suspension of the government contracts is as a result of the officials accusing suppliers of using parallel forex rates that are 50% to over 100% of the official exchange rates.

An example of this was the government last week suspending the procurement of 173 laptops and 78 desktops for the Parliament of Zimbabwe, with each unit priced at US$9 2254,48 and US$3 075,61, respectively, four times the normal prices.

Finance and Economic Development’s permanent secretary, George Guvamatanga, is on record stating that this obscene pricing was being used to fuel the parallel forex market.

“This is because the public sector accounts for nearly 70% of the demand for goods and services in the economy with the government’s monthly operating budget estimated between $95 billion and $100 billion,” Zimbabwe Coalition on Debt and Development (Zimcodd) said last week in its weekly review.

“Of this amount, about $50 billion is spent on government suppliers who in turn offload these balances on the alternative markets in search of a stable US dollar.”

Zimcodd said the shortage of forex on the inefficient foreign currency auction forced businesses to peg prices of goods and services according to the parallel exchange rate so as not to lose value on their  goods and services.

However, since the official forex rate has seen the Zimbabwe dollar depreciate to $604,18, against the greenback, from $159,34 before Treasury and RBZ measures, the economy is still declining.

“Other businesses continue to increase the prices of goods and services as the official rate continues to deteriorate.

More so, it remains to beseen if stabilising parallel rates will be sustained as government spending is set to increase ahead of the 2022/23 cropping season. It is reported that the government is targeting farm inputs support to 3,2 million smallholder farmers this year, up from 2,3 million that previously participated,” Zimcodd said.

“With global prices of fertilisers and chemicals remaining elevated, Treasury is set to spend an unprecedented amount on agricultural subsidies. In July, it requested a supplementary budget of about $929 billion in addition to the $968,3 billion that was initially approved for 2022.

Zimcodd said if approved the government would inject Zimdollar liquidity of nearly $2 trillion.

“This will exert destabilising effects on the exchange rate and also bring back 2007/8 hyperinflation memories of the then RBZ governor Gono’s trillion era,” Zimcodd added.

Zimcodd said next year’s general elections would likely influence government spending behaviour and trigger policy slippages.

“Last but not least, the rising geopolitical tensions powered by the Russia/Ukraine war pose great threats to global supply and distribution chains which may fuel global inflation,”  Zimcodd  said.

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British pound stabilizes, but turmoil still roils UK economy – New Zimbabwe.com

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By Associated Press


LONDON: The British pound stabilized Tuesday as U.K. authorities tried to ease investor concerns after the biggest tax cuts in 50 years sent the currency tumbling to a record low the previous day.

The turmoil is already having real-world effects, with several British mortgage lenders pulling offers from the market amid expectations the Bank of England will sharply boost interest rates to offset the inflationary impact of the pound’s recent slide.

It was trading at around $1.08 on Tuesday, after plunging as low as $1.0373 early Monday. The British currency is still down 4% since Friday, when Treasury chief Kwasi Kwarteng announced plans for 45 billion pounds ($49 billion) of unfunded tax cuts. The pound has fallen 20% against the dollar this year.

Kwarteng’s announcement, which comes at the same time the government plans to borrow billions to help shield homes and businesses from soaring energy prices, sparked concerns that the new government’s policies would swell government debt and further fuel inflation.

Late Monday, the central bank said it was “closely monitoring” financial markets and was prepared to boost interest rates “as much as needed” to curb inflation, which is already running at 9.9%, the highest among major economies. The bank’s Monetary Policy Committee isn’t scheduled to meet until Nov. 3.

“There is no rate increase today and speculators will enjoy the prospect of two months of Bank of England inactivity if the statement is taken at face value,” said Alastair George, chief investment strategist at Edison Group.

The U.K. Treasury also sought to reassure investors, saying it would set out a more detailed fiscal plan and independent analysis from the Office for Budget Responsibility on Nov. 23.

“We have responded in the immediate term with an expansionary fiscal stance on energy because we had to. With two exogenous shocks — Covid-19 and Ukraine — we had to intervene. Our 70-year-high tax burden was also unsustainable,″ Kwarteng said in talks with investors on Tuesday following the so-called “mini-budget″ last week.

“I’m confident that with our growth plan and the upcoming medium term fiscal plan — with close cooperation with the Bank — our approach will work,” he said.

That did little to quiet criticism of the government’s policies.

Lawrence Summers, who served as U.S. Treasury secretary under Bill Clinton, said he was surprised that the International Monetary Fund hadn’t spoken out because a currency crisis in Britain could have worldwide consequences and affect London’s viability as a global financial center.

“I was very pessimistic about the consequences of utterly irresponsible U.K. policy on Friday,” Summers tweeted Tuesday. “But, I did not expect markets to get so bad so fast.”

Kwarteng and Prime Minister Liz Truss, who replaced Boris Johnson as prime minister on Sept. 6, are betting that lower taxes and reduced bureaucracy eventually will generate enough additional revenue to pay for the tax cuts announced Friday.

But many economists say it is unlikely the gamble will pay off.

Torsten Bell, who heads the Resolution Foundation, a think tank focused on economic inequality, said the markets were looking at the government’s plans “and saying that is not what serious policymaking looks like.”

Market reaction to Friday’s announcement will hurt consumers by fueling inflation in the short term, leading to higher mortgage payments in the medium term, and boosting government borrowing in the long term, the foundation said Monday.

“The world we are heading for is a bumpy few weeks,” Bell told Sky News. Kwarteng “is now going to have quite a tough time because he has now set out plans to balance the books in November. That is going to be very hard.”

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Lifeline for locals seeking specialist medical services – Chronicle

The Chronicle

Leonard Ncube , Victoria Falls Reporter
ZIMBABWEANS seeking specialised healthcare outside the country especially in India could get a lifeline as a Botswana health institution Francistown Academic Hospital (FAH) is seeking partnerships with local health service providers for locals to get medical help in the neighbouring country.

Over the years, many Zimbabweans have been referred by doctors to India for specialist surgeries.

The common surgeries people travel to India for include open heart and liver surgery, cardio and vascular surgery, kidney transplant, neurosurgery, radiation surgeries and intestines laparoscopic among other services.

Some people have died after failing to raise money for transport, accommodation, food and surgery running into thousands of United States dollars.

Few that have been lucky have been assisted by well-wishers to raise the money.

Government is encouraging partnerships in the health sector while efforts are also being made to come up with a National Health Insurance towards a universal health service.

FAH is a subsidiary of Indus Healthcare in India, a one-stop medical facility with a variety of services, most of which are demanded by Zimbabweans.

FAH has partnered the Association of Health Funders Association of Zimbabwe (AHFoZ) in an effort to work with local health care service providers to improve access to health services for Zimbabweans.

The organisation attended the recent AHFoZ annual conference in Victoria Falls where Deputy Minister of Health and Child Care Dr John Mangwiro, who was representing Vice-President Dr Constantino Chiwenga as guest of honour, said such a partnership will be beneficial to Zimbabweans.

Acting President Constantino Chiwenga

“This is interesting and will reduce costs for our people who go out of the country to seek medical services especially in India,” said Dr Mangwiro during a tour of exhibition stands where FAH was exhibiting.

FAH business development and marketing manager Mr Nonofo Brian Molatlhegi said Zimbabweans will be able to use their medical aid if the organisations strike deals with local schemes.

“This is a subsidiary of Indus Group with six hospitals in India and we facilitate treatment or make payment terms for clients in Francistown instead of going to India.

“We offer a wide range of services where pre-operation procedures will be done in Francistown and if need be the patient will be airlifted to India but reviews and follow-up surgeries will be done in Francistown where patients get the same help they would have gotten if they were in India. This is a win-win situation as people will save on money and will be able to save life,” said Mr Molatlhegi.

The Government of Botswana is an equity partner in the hospital.

Mr Molatlhegi said instead of patients flying to India, FAH can also fly Indian doctors to Francistown.
Most people who travel for treatment in India are accompanied by a relative who will be taking care of them and that increases costs.

“This is what we are selling to Zimbabwean medical providers that clients should not go to India where they are unknown. When there are many clients we collect the cases and fly doctors to Francistown to do surgeries. The patients share the cost of flying a doctor and that will be cheaper than going there individually,” Mr Molatlhegi.

FAH was opened in 2020 and targets the Angola, Botswana, Zambia and Zimbabwe markets and Zambia before spreading to the whole continent.

AHFoZ is a member of Health Funders of Southern Africa and International Federation of Health Plans in UK as the health sector continues to strike partnerships. [email protected]

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Parly and ZELA draft laws to curb illicit financial flows – New Zimbabwe.com

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By Thobekile Khumalo


PARLIAMENT, in partnership with Zimbabwe Environmental Law Agency (ZELA), is working on crafting laws to curb illicit financial flows (IFF) manifested by loopholes in policies contributing to the crippled economy and underdevelopment in the country.

IFFs worsen poverty and are mainly exacerbated by the mining sector where gold is not submitted to Fidelity Gold Refineries but sold to the black market that offers a higher rate. This has necessitated the formalisation of small scale and artisanal miners as a way of preventing resource leakages.

In an interview with the vice chairperson of Africa Parliamentarians Against Illicit Financial Flows, Member of Parliament (MP) Vimbai Matevere said as law makers they should make sure they do not only enact legislation, but give solutions to problems.

“As Parliament we’re not only suppose to create laws but also be giving solutions so that we make our country go forward. So, here we are discussing about illicit financial flows because it cripples the economy.

“The moment that we have a lot of illicit financial flows going out of the country, we realise it reduces the amount that we’re supposed to have as a country.

“Our revenue collection then reduces from the intended ways that we want it to,” she said.

Matevere said they are working on certain laws that are able to curb illicit financial flows.

“We need to appreciate that there are certain sectors in the economy which include mining, tourism and agriculture which are the bases of National Development Strategy 1 (NDS1) and when we look at them we need to find out ways for them to become effective,” she said.

She added: “We are also talking about formalising gold mining, especially that is now small scale miners, it’s a matter of us having some cultural mindset which makes it important to understand why it is important to formalise the artisanal and small scale miners.

“We need to understand their contribution to economic development and we also need to appreciate that its also important for us to have a holistic approach so that we understand that it will go from generation to generation because we understand that land is an infinite resource and also the same with the mines and also the minerals that we have.

“We need to understand that we create mechanisms that make us be able to sustain our operations going forward as a country. So these are some of the objectives that also made us be able to get here.”

According to a 2013 African Development Bank report, Zimbabwe had lost a cumulative US$12 billion in the last three decades through lFFs, ranging from opaque financial deals to tax avoidance and illegal commercial activities.

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