HomeBusiness DigestHoliday allowances to bounce back

Holiday allowances to bounce back

Ngoni Chanakira

HOLIDAY allowances could soon be re-introduced if Zimbabweans in the diaspora continue repatriating millions in foreign currency from their stations.

ana, Arial, Helvetica, sans-serif”>However the figure could be slashed to about US$1 000 each annually for the time being instead of the US$2 500 originally offered before the system was abandoned.

Reserve Bank of Zimbabwe governor Gideon Gono says the issue is still under consideration and would be handled with caution as long as the country needed foreign currency for fuel, electricity, drugs and food imports.

Individual holiday allowances, which stood at US$2 500 annually, were stopped by the RBZ last year, riling citizens who contended that it was their democratic right to go on holiday abroad.

Some top businesspeople have packages that include paid holidays in foreign currency annually and are allowed to take their families along in what are termed “Time share holiday schemes”.

“We decided to stop issuing holiday allowances to all and sundry because we thought that the allowances were not a priority at the time,” Gono said. “How can we have individuals wiping away the little foreign currency available at the central bank for holiday purposes? We decided to give preference to other more important projects.”

He said the fixed auction system intentionally threw out bids for the purchase of foreign currency for holiday purposes.

“I can confirm that bids for holiday allowance are being thrown out,” he said. “However when the situation gets back to normal we will review this together with the commercial banks.”

A senior Standard Bank of Zimbabwe Ltd Treasury department official said his bank was flooded with requests from individuals seeking holiday allowances.

Gono said the auction system, while not being perfect, was striving to fulfill the needs of the essential sectors in business.

However the system has riled the Confederation of Zimbabwe Industries who continually complain that their members are being short-changed because of the low rate offered at the moment.

The CZI said the fixed rate of $5 200 was killing the export market because it is unviable.

Gono disputed this, saying the problem with the industrialists was that they were used to complaining all the time.

Economist John Robertson said the figure was not viable because of hyperinflation.

“Because the Zimbabwe dollar has not been permitted to move in response to domestic inflation since the beginning of 1999, the official exchange rate soon became a seriously misleading measure of the true value of Zimbabwe’s currency,” Robertson said. “During the whole of 1999 and up to August 2000, and again during the months from October 2000 to the end of 2003, the official exchange rate was held at fixed levels that, because of inflation, soon bore no relation to the real value of the currency.”

In his monetary policy statement in December last year Gono admitted that the exchange rate management issue was as emotive as the controversial land question and “remains so”.

“Moving forward, it has to be realised that, no business community can ever hope to succeed in an environment of acrimony and antagonism with its government and equally, no government can hope to function smoothly when it is at variance with its business sector,” he said.

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