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Farirai Machivenyika
Senior Reporter

Contrary to beliefs in sections of society, the Government loses more revenues due to differences between the official and

parallel market exchange rates, Deputy Minister of Finance, Economic Development and Investment Promotion, David

Mnangagwa has said.

The Deputy Minister said this on Wednesday during the National Assembly’s question time.

“I would say the Government is probably the biggest loser when there is a discrepancy between the exchange rate,” he said.

“The market usually believes that it is only private business people who lose out but Government is the biggest loser.

“Whenever there is a gap in the exchange rate, it means that the tax collector is collecting revenues at the official exchange rate

and paying for services at a parallel market rate while also paying its workers at the official lower rate while the civil servants

have to go out into the market where there is a distortion.

“This issue of distortion puts pressure, not just on retailers but on the economy in general,” he said.

Deputy Minister Mnangagwa added that the differences in the exchange rate between the formal and informal markets were

due to speculators who had access to both the ZiG and the US dollars resulting in pressure on the formal US dollar market.

“This has put pressure on the US dollar market. It reaches a point Mr Speaker, where the Governor of the Reserve Bank, the

monetary authorities, have to philosophically or principally decide – does one liquidate the gold reserves to satisfy the urge of

some of these speculators or do you consider reaching a point where you devalue and become more reflective of what is

obtaining in the overall market?

“I would think that the Governor’s statement and actions two weeks ago, spoke to the latter. I will say this was not the alpha

and omega of the solutions that are there. As I have mentioned Mr Speaker, these distortions, this discrepancy not only affects

the market or industry but it also affects the Government at large, which is the biggest spender in the country.

“So, we are indeed motivated to make sure that this gap is closed and henceforth protect the integrity of our currency. So, these

anomalies are being noted.”

Two weeks ago, the RBZ Monetary Policy Committee adjusted the ZiG by 42,55 percent to engender stability and reduce the

gap between the official and parallel market rate.

Before the adjustment, the ZiG was trading between ZiG13,6 and ZiG14 per US dollar but is now trading at ZiG24,39.

The adjustment was the first following the ZiG’s introduction in April.