Concern over weakening local currency

Bulawayo residents have expressed concern over the weakening local currency, the RTGS dollar, which this week further tumbled to trade at between 18 and 20 against the United States dollar at the parallel market and bureau de change outlets.

This comes at a time when the country’s inflation rose to 175,6 percent for the month of June from 97,8 in May, according to the Zimbabwe National Statistical Agency (ZimStats).

Last week, the Zimbabwean dollar, which in June was restored as the only legal tender for local payments, was trading at between 13 and 14 against the greenback.

Economists have said fluctuations in the exchange rates were undermining economic stability and investor confidence in a country that desperately needs investment.

The recent shooting of the exchange rates leaves civil servants and the majority of Zimbabweans who are paid in the local currency at the mercy of price hikes.

“There seems to be no imminent solution to controlling the ever-spiralling rates,” complained Cephas Mabvuta.

“What I have noticed is that these guys (authorities) come up with temporary measures to address people’s concerns. There is no long term solution as it stands and our salaries have remained stagnant in the face of these rates increases and the government is just quiet on that with regards to the private sector.”

Mabvuta he said although he is not an economist, he was foreseeing the Zimbabwean economy soon re-dollarising.

“It (shooting of exchange rates) is a reflection of an economy that is haemorrhaging and bleeding profusely at an alarming and unprecedented rate,” said Thomas Sithole, a social commentator.

“The ordinary citizen is the one who is most affected by this crisis. The elite are well cushioned and seem to be benefiting from the rot.”

Discent Bajila, of the Movement for Democratic Change (MDC), challenged the government to move with speed and avert disaster.

“The escalating exchange rates are an albatross on the necks of the working people whose salaries remain fixed in the bond currency while prices are pegged at forex equivalents,” he bemoaned.

“The government must speedily consider the reintroduction of the multi-currency regime, payment of salaries and wages in a stable foreign currency and reposition the bond before demonetising it.”

Meanwhile, the government has increased the tax-free threshold to $3 500 from $ 700 with effect from August 1, 2019, and reduced the highest tax rate on taxable income from 45 percent to 40 percent.

Workers earning $3 500 and below will not be taxed while those earning $3 501 to $15 000 will be taxed at a rate of 20 percent.

Those earning between $15 001 and $50 000 will be taxed at a rate of 25 percent; a salary of between $50 001 and $100 000 attracts a 30 percent tax; salaries of between $100 001 and $150 000 attract a 35 percent tax while salaries above $150 001 will be taxed 40 percent.

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