THE Zimbabwe Coalition on Debt and Development (Zimcodd) says government should be consistent in applying economic laws and policies to effectively deal with exchange rate variability between the official rate and the parallel market.
Government recently instituted measures which resulted in the suspension and cancellation of trading licences of at least 17 pharmacies accused of destabilising the economy through forward pricing and speculation.
In a report yesterday, Zimcodd said: “A standing challenge in the way that the government regulates the economy is the inconsistency in the application of policy.
“While these businesses in the pharmaceutical sector are being hounded for high exchange rates and taking payments in the more secure United States dollars, there are virtually no fuel stations trading in Zimbabwe dollars anymore.
“Public offices such as the Registrar-General are taking US dollars for passport applications, telecommunications companies including the government-owned NetOne, are also selling some products in US dollars.
“For certain reasons, they are left to operate without any recourse. Allegations stand that the fuel sector is allowed due to cronyism and the interests of the ruling political elite in the fuel cartels. If the law and policy are not applied fairly across the economy, the government cannot hope to retain control.”
Zimcodd argued that the use of the Zimdollar as the currency of choice should be applied across the board.
“Allowing the fuel sector to operate in US$, while restricting other sectors shows increased policy inconsistency,” said Zimcodd, while urging government to promote localisation of economic development, investment and growth in the spirit of devolution.
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Noting that an import-based economy is vulnerable to external shocks, government should put in place measures which “maintain monetary and fiscal discipline which include curbing resource leakages, corruption and illicit financial flows”.
The debt watchdog called for promotion of sustainable domestic resource mobilisation.
“Once the government can generate resources locally, production in our mainline economic sectors will rise, allowing local businesses to invest and also sell these products in the local currency,” it said, while urging authorities to avoid price controls.
“As seen in past years (such as in 2008), regulating pricing by formal businesses causes products to disappear from shelves only to reappear in the informal sector,” Zimcodd added.
The Zimdollar was yesterday trading at $4 998 against the US dollar on the official market, while the parallel market exchange rates were ranging from between $8 500 to $11 000.
