HARARE, Feb. 4 (Xinhua) -- Zimbabwe's Finance Minister Mthuli Ncube on Friday announced new measures aimed at promoting wider use of the Zimbabwean dollar that has lost value against the U.S. dollar in recent months.
Ncube said while the foreign currency auction system introduced in 2020 had provided a platform for sustainable use of the local currency by individuals and corporations, it was now imperative to expand areas where the Zimbabwean dollar should be used.
Among the measures, Ncube said mining royalties were now payable in Zimbabwe dollars up to a limit of 50 percent of the total due.
Since February 2019, mining companies had been required to pay mining royalties in foreign currency to the extent that the amounts from which the mining royalties withheld were foreign currency amounts.
All domestic taxes due from exporters on their export receipts were also now payable in both foreign and local currency in direct proportion to the approved export retention levels, Ncube said.
"These measures reflect the government's commitment to promote the wider use of the Zimbabwe dollar and to continuously strengthen the economy so as to build long-lasting macro-economic stability," Ncube said in a statement.
The Zimbabwean government in June 2019 removed the multiple currency regime introduced in 2009 after the previous Zimbabwe dollar had been rendered worthless by a decade of hyperinflation, and re-introduced the Zimbabwe dollar as the sole legal tender, in a move aimed at stabilizing prices and containing inflation.
But in March 2020, the Zimbabwean government allowed people with free funds to use their foreign currency to pay for goods and services for easier transactions following the outbreak of the coronavirus pandemic. The use of the U.S. dollar has since grown in the economy.
Composed of the electronic Real Time Gross Settlement (RTGS) dollar, bond notes and bond coins, the Zimbabwean dollar has been losing value against the U.S. dollar in recent months.
Despite introducing the auction system in 2020 to help foster transparency in the management of scarce foreign exchange and in price discovery of the market exchange rate, the Zimbabwean dollar has continued to lose value against the U.S. dollar.
Upon introduction, the Zimbabwe dollar debuted at 25 against the U.S. dollar at the auction system and has since moved down to 116.65 at the last auction on Feb. 1, 2022.
The government has blamed illegal foreign currency dealers for eroding the value of the Zimbabwe dollar.
Last year, the Reserve Bank of Zimbabwe named and shamed 30 individuals who it alleged has abused mobile phone services and social media to promote and facilitate illegal foreign exchange transactions and money-laundering activities.
Several suspected illegal foreign currency dealers, including four company directors, were also arrested on charges of money laundering.
Ncube said the new measures would help stem illegal trade in foreign currency. ■