Senior Business Reporter
THE Government has registered significant milestones in efforts to stabilise the economy and set it on a sustainable path to recovery and growth, a Cabinet Minister said, despite the few hitches threatening to undo the progress.
Since assuming power in 2017, the Second Republic has adopted several policy measures to stabilise the domestic currency exchange rate, steady and lower inflation among the cocktail of policy measures across the economy .
Finance and Economic Development Minister Mthuli Ncube, speaking at a breakfast business forum in Harare yesterday, said significant progress had been achieved on economic reforms, which have also seen the country improving relations with international finance institutions.
“Government plans to issue a US dollar-denominated bond on the local stock exchange which should help develop the yield curve.
“Government has commenced payments under the Global Compensation Deed, while the interim target for making half of the US$3,5 billion total has been extended to July 2022.
“The Financial Action Task Force (FATF) removed Zimbabwe from the list of countries that are considered to be insufficiently compliant in implementing Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) Standards on March 4, 2022, following the successful implementation of the FATF Action Plan,” he said.
The Minister said the Government had given sector specific incentives, made progress on legislative reforms, signed several bi-lateral agreements and made headway on the arrears clearance plan.
On economic reforms, Minister Ncube said progress was made on the reintroduction of local currency and the introduction of Dutch Forex Auction as well as the removal of fuel and electricity subsidies.
He said the Government has also moved to tighten quarterly reserve money target at 5 percent for the quarter ending June 2022 as well as taken measures to liberalise the foreign exchange market.
The Treasury chief said several mining projects were at different stages of implementation largely as a result of the improved economic environment.
These include the US$4,2 billion Great Dyke Investments Platinum Mine, which is already under construction and the US$4 billion Karo Resources Mhondoro-Ngezi platinum project, which is running ahead of schedule.
Minister Ncube said the Arcadia Lithium mine is being developed while coal production at new coal mines has opened.
As part of the economic reforms, Minister Ncube said on agriculture, the Government replaced Command Agriculture with private sector funded Smart Agriculture and has completed the Land Audit.
“Farm downsizing is in progress and we have signed the Global Compensation Deed,” he said. On power projects, Minister Mthuli said Hwange Unit 7 and 8, which is going to produce 600 megawatts, had largely been completed.
He said other ongoing power projects included the Zambezi Gas and Coal — 750 MW, Western Areas — 600 MW, Jinan — 600 MW, Tsingshan — 100MW, Zimbabwe Zhongxin Electrical Energy — 430 MW and the various Solar Projects of about 300 MW.
The Government, the Minister said, has also made reform progress in sectors such as infrastructure development, education, political, road networks, information communication technology, health services, youth and gender empowerment, social protection, justice delivery and communication.
Other reforms have been registered in sectors such as industry, tourism, regional economic development and international engagement and re-engagement.
On the measures to strengthen the currency, Minister Ncube said the Treasury had made progress on fiscal consolidation, which had spawned a balanced budget without recourse to central bank overdraft, as Government spending was contained within the budget.
“Government has been curbing speculative borrowing through appropriate interest rate adjustments such as the Bank policy rate increase to 80 percent for the RBZ overnight window,” he said.
He added that the Government had also been regulating unethical practices on the stock exchanges and bureaux de change.
Minister Ncube said progress had been made in developing an arrears clearance strategy with support provided from the IMF and World Bank.
“Engagement is on-going with various potential sponsors, which is necessary before arrears with selected multilateral creditors can be addressed,” he said.
The Minister said in addition to the general tax incentives, specific incentives were extended to sectors such as manufacturing, mining; agriculture; tourism; and transport.
Some of the manufacturing sector incentives include inward processing rebate (restitution of duty), which is the rebate of duty granted to approved manufacturers on imported raw materials used to manufacture goods destined for export.
On the duty drawback system, rebate of duty is granted to approved casual exporters on raw materials imported for use to manufacture goods destined for export.
Registered electrical manufacturers rebate is granted to a registered manufacturer on imported component parts and materials in their completely knocked down state, for use in the manufacture of approved electrical goods.
The manufacturing sector has deferment of value added tax granted on capital equipment imported for a period not exceeding 120 days subject to the conditions set by the Commissioner-General.
Among the many incentives for the mining sector, it has a rebate of duty on goods for the prospecting and search for mineral deposits.
VAT deferment is granted to mining companies on capital equipment imported for a period of ninety days subject to the conditions set by the Commissioner-General.
On Agriculture, rebate of duty on materials used in the preparation and packaging of fresh produce for export is granted while most farm inputs such as animal feed, animal remedy, fertiliser, plants, seeds and pesticides and equipment or machinery used for agricultural purposes are zero rated for VAT purposes.
Minister Ncube said the Government also has various tax incentives for businesses operating in Special Economic Zones.