Thursday , January 28 2021

Mnangagwa resort to presidential decree, because Forex stocks in Zimbabwe – Zimbabwe

President of Zimbabwe Emmerson Mnangagwa (C) Expects Honor Honor of Car during the Defense Day Day at the National Sports Stadium in Harare on August 14, 2018 / AFP PHOTO / Jekesai NJIKIZANA

President of Zimbabwe Emmerson Mnangagwa resorted to temporary powers to deal with illegal currency traders, as the South African country continues to experience barriers to foreign exchange challenges.

According to the regulations coming into effect this Monday, Zimbabwe will follow the unexplained movement of money in the financial system.

Those caught on the wrong side of the law will be sentenced to ten years in jail, while the "rich fortune" will be seized, it was announced.

Mnangagwa's move to resort to the Act on Presidential Power of the Earth (Temporary Measures) comes at the same time as money circulates outside formal channels.

While central banks insist that the US dollar is in line with local notebooks (Zimbabwe's surrogate currency), illegal currency traders use a US dollar equivalent to an average of three bonds.

Pharmacies, too, fail to access currencies from ordinary banking channels, are now looking for US dollars or five times more than when customers use plastic money.

Provisional measures Mnangagwa may be effective for six months. Within six months, the Parliament can use its powers to make law become permanent, state media quoted State Secretary of State Virginia Mabhiza as saying.

Analysts, however, say that Zimbabwe will continue to face currency challenges as long as productivity is very low.

"We import more than we export, this is the number one challenge, then the government is also spending more than it does, creating a fiscal deficit that unfortunately finances financial instruments that are not subject to foreign currency.

"So if we do not solve our fiscal deficit, we can introduce new laws, but foreign exchange will continue to be a challenge for business," local analysts Walter Mandey said.


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