President Emmerson Mnangagwa has announced a number of measures that he believes are necessary to stabilize the exchange rate.
In a televised speech this evening, Mnangagwa imposed capital controls in an attempt to curb the local currency’s rapid fall saying forex inflows show that the recent exchange rate depreciation is being pushed by elements outside the obtaining economic fundamentals.
Meanwhile, President Mnangagwa also announced that all domestic foreign currency transfers now attract the Intermediate Money Transfer Tax (IMTT) of 4%.
And cash withdrawal above US$1 000 now attracts 2% tax. This excludes bank charges.
He has also suspended all bank lending whether to government or private sector, in an attempt to reduce money creation that is prone to abuse for speculative purposes.
This is likely to see banks struggling to survive since their core business is lending.
Companies borrow from banks to meet instant liquidity demands, i.e to pay salaries and bills, what this measure means is that if one’s firm runs into any working capital problems, they cannot, visit their bank for a loan.
It also means no one can get a loan to start a business, also meaning that even commercial farmers, who rely on bank loans to fund their agriculture will not be able to do so.