Govt Divided Over Forex Reforms

GOVERNMENT is divided over the liberalisation of the foreign currency market amidst revelations that a five-member Cabinet committee was appointed two weeks ago to discuss the impact of rising prices caused by the new market reforms.

 

The committee was last week also tasked to look into the role of the National Incomes and Pricing Commission (NIPC), sparking fears that government could be gearing for a fresh crackdown on businesses and a possible removal of foreign exchange reforms.

NIPC chairman Godwills Masimirembwa told businessdigest that the committee had discussed the floating of the Zimbabwean dollar and how it had adversely affected the NIPC’s operations.

“They discussed the impact of liberaliasation of the foreign currency regime on prices,” Masimirembwa said. “They also looked at how the interbank rates were pushing prices and they are really worried.”

The five ministers are Obert Mpofu (Industry and International Trade), Samuel Mumbengegwi (Finance), Rugare Gumbo (Agriculture), Mike Nyambuya (Energy and Power Development) and Sylvester Nguni (Economic Development).

Masimirembwa said the committee had been worried by the rising prices that gripped the country since Reserve Bank governor Gideon Gono devalued the dollar and allowed interbank trading of foreign currency.

Masimirembwa also attacked the market reforms for failing to guarantee businesses foreign currency and said the NIPC had established that the business community was failing to access foreign currency from the banks.

“Businesses have said they were being forced to resort to the parallel market because of this,” he said. “It appears that the parallel market is the only place where foreign currency is being sold. Banks are not supplying it and that has been a major problem.”

The committee reportedly had agreed that the interbank rate was stoking the recent wave of price increases with Masimirembwa saying the foreign currency market
reforms had caused serious instability in the country.

He said the committee had sought out ways to empower the NIPC to deal with the rising prices.

“The NIPC was set up by an Act of Parliament with the objective of achieving social stability,” Masimirembwa said. “That balance has been torpedoed by the interbank rate.
The ministers met last week and this week to assess the negative implications on the NIPC.”

Nyambuya, Mumbengegwi, Gumbo and Mpofu could not be reached for comment.

By Kuda Chikwanda/Jeslyn Dendere

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