KEY POINTS
- Zimbabwe will make salary adjustments for state servants to protect them from the recent weakening of the currency.
- The ZWG depreciation is attributed to new RBZ measures by Finance Minister Mthuli Ncube.
- The government gives closing the difference between official and black market rates top priority.
According to Finance Minister Mthuli Ncube, the Zimbabwean government intends to modify the pay of civil personnel in light of the recent significant devaluation of the ZiG currency.
Ncube ascribed the over 44 percent value loss of the Zimbabwean dollar (ZWG) last week to new policies implemented by the Reserve Bank of Zimbabwe (RBZ).
Addressing salary devaluation impact
Ncube said that following President Emmerson Mnangagwa’s State of the Nation Address, the government is formulating policies to aid public sector employees whose earnings have been negatively impacted by the devaluation. He underlined how the flexible exchange rate will immediately affect pricing and salaries, especially for public employees.
“As the government, we will make some adjustments to civil servants’ salaries to cushion them against the devaluation,” Ncube stated. “We will not fully restore their purchasing power, but we aim to ensure salaries are adjusted accordingly.”
Ncube did clarify, though, that not all people and companies impacted by the currency devaluation will receive compensation. He admitted that there would inevitably be some suffering when new rules are put into place.
He added, “We understand the economic hardships caused by the devaluation, and while we will make some adjustments, compensation will not extend to everyone.”
Economic stabilization efforts
Ncube also emphasized larger economic stabilization initiatives, emphasizing that the government’s top goal is to establish a macroeconomic climate that supports economic expansion. According to New Zimbabwe, he talked on the new policy measures that the Reserve Bank of Zimbabwe (RBZ) had put in place, such as changing the official exchange rate from ZW14 to ZW25 per US dollar.
In order to discourage speculative activity in the currency market, the policy rate was also raised to 35 percent as part of the measures. To stop excessive withdrawals from the economy, the Reserve Bank of Zimbabwe (RBZ) restricted capital outflows and raised reserve requirements for both domestic and foreign loans.
“The Reserve Bank introduced a series of measures aimed at stabilizing the currency and addressing economic imbalances,” Ncube explained. “Our intention in adjusting the exchange rate is to close the gap between the official rate and the parallel market rate. This should help retailers and businesses by reducing volatility in the market.”
Closing the exchange rate gap
Ncube acknowledged that companies, especially merchants, have difficulties as a result of pricing confusion brought about by the discrepancy between official and black market exchange rates. He noted that recent changes have reduced this disparity, relieving retailers and facilitating their ability to establish consistent pricing.
“We are focused on preventing further divergence between official and parallel market rates,” Ncube stated. “Closing the gap helps ensure price stability, and we will continue looking at additional measures to maintain this balance and support economic stability.”
The goal of the government’s policy actions is to balance the negative effects on people and businesses with the promotion of sustainable growth and development.
