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Mthuli Ncube threatens companies

08 Oct 2021 at 19:04hrs | Views
Finance minister Mthuli Ncube resorted to threats yesterday as he battled to bring sanity to the foreign currency market.

Ncube said the government was planning impromptu audits and to suspend licences for companies found on the wrong side of the law.

He spoke as black-market rates maintained the US$1:ZW$170 highs yesterday, after shooting up about four weeks ago due to shortages on the official market, the foreign currency auction system.

The domestic currency has also been battered on the official markets, where it began trading at about US$1:ZW$88,50 this week, after holding its ground, trading at about US$1:ZW$85 most of the year.

Developments on the foreign currency market have sparked off a fresh round of inflation fears, with monthly inflation increasing from 1,58% in April to 4,73% in September, according to the Zimbabwe National Statistics Agency.

Last week, the Reserve Bank of Zimbabwe revised its annual inflation target from between 25% and 35% , to between 35% and 53%.

"The Zimbabwe Revenue Authority will be carrying out impromptu audits of corporate activities with a view of quantifying potential tax liabilities arising out of illegal foreign currency trading," Ncube said in his statement.

"Businesses who disregard the law and continue to price their goods on the parallel market rates will have their licences suspended.

"The government, through various agencies is seized with instituting various measures to curb illegal trade in foreign currency and its associated twin evil, that of parallel market benchmarking or indexation of prices of goods and services at parallel market exchange rates.

"The recent resurgence in these practices, which have been identified as contributors to price instability in the economy and are imposing significant downside risks to macroeconomic stability, and the erosion of domestic and international competitiveness is therefore a cause for serious concern," he added.

The official forex market has been struggling to meet demand, forcing businesses to source forex from the black market, joining households and informal businesses relying on the unofficial market for US dollars.

Ncube accused businesses accessing forex on the auction of pricing using black market rates and warned of an imminent crackdown.

Source - The Zimbabwe Independent
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