Reserve Bank of Zimbabwe (RBZ) Governor, John Mangudya, during a pre-budget parliamentary seminar today, urged that the forthcoming 2024 budget should align with current fiscal and monetary strategies. The budget is due to be presented by Finance Minister Mthuli Ncube and is expected to address issues such as slowing growth, geopolitical disturbances, climatic shocks, and persistent inflation.
Mangudya highlighted the problem of rising global inflation, which has been triggered by supply chain disruptions since 2021. This has led to increased borrowing costs and Zimbabwe's annual inflation rate now stands at 17.8%. The RBZ governor anticipates that global inflation will continue to rise, hitting 6.9% in 2023 and 5.8% in 2024.
In order to ensure macro-stability while promoting the formalization of the economy through digitization, Mangudya recommended several measures. These include abolishing tax on point-of-sale transactions, increasing public transactions settled in local currency including QPDs (Quarterly Payment Dates), leveraging increased diaspora remittances and private sector loans, rationalizing the tax system, and effective communication on policies to anchor inflation and exchange rate expectations.
Despite a drop of 9.6% in export receipts, foreign currency receipts have seen growth of 2.5%. The governor's call for fiscal prudence and a strict monetary policy in 2024 reflects the government's efforts to confront both domestic and global economic risks.
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