Zimbabwe institutes measures to check runaway prices as businesses benchmark against parallel forex rates

0 Comment(s)Print E-mail Xinhua, October 8, 2021
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HARARE, Oct. 7 (Xinhua) -- The Zimbabwean government has directed the Zimbabwe Revenue Authority to carry out impromptu corporate audits to quantify increased tax liabilities as various businesses continue to peg their prices at illegal foreign currency exchange rates.

A statement issued by the Minister of Finance and Economic Development Mthuli Ncube Thursday said that the Financial Intelligence Unit (FIU) of the Reserve Bank of Zimbabwe (RBZ), the country's central bank, will also continue to closely monitor and analyze financial transactions to identify, expose and take action against perpetrators of money laundering and other financial crimes.

The latest government move comes against the background of a huge spike in the parallel market foreign currency exchange rates which many businesses are using to benchmark their prices, resulting in huge increases in prices of basic commodities.

Ncube said the recent resurgence of parallel market benchmarking or indexation of prices of goods and services at parallel market exchange rates was worrying.

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

A top company in the food business was this week accused of pegging its prices at the parallel market rate of 1 U.S. dollar to 200 Zimbabwean dollars, prompting the RBZ to institute investigations into the matter.

Ncube said the government had improved access to foreign currency by all bona fide businesses and individuals through the foreign currency auction system.

RBZ recently began naming and shaming individuals who were allegedly fueling the parallel market and directed that their mobile phones be disconnected and their bank accounts frozen.

Ncube also warned that businesses which continued to flout the foreign exchange regulations would have their licenses suspended, while urging the public to report to the FIU and the National Economic Conduct Inspectorate about all business entities directly or indirectly benchmarking prices at parallel market exchange rates. Enditem

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