Registered users can save articles to their personal articles list. Login here or sign up here

Zimbabwe to subsidise public transport as inflation jumps

The support will cost the government about $8m a month.

Zimbabwe will subsidise public transport and cut fuel duties by more than half as it tries to ease the impact of rampant inflation on its poorest citizens, according to Finance Secretary George Guvamatanga.

The support will cost about $8 million a month, Guvamatanga said by phone on Monday. “A quantified, budgeted and targeted subsidy is a good subsidy,” he said. The cut in duties is expected to counteract an expected rise in fuel prices, he said.

Read: Zimbabwe scraps official parity for fuel imports

The measure was introduced as the central bank and finance ministry injected $500 million to improve the liquidity of the foreign-exchange interbank market. Fuel importers will no longer get their currency from the central bank but instead will buy it on the interbank market, said Guvamatanga.

Zimbabwean President Emmerson Mnangagwa, who took power in 2017, has been trying to revive a collapsing economy by luring investment and appointing Mthuli Ncube, an economist rather than a politician, as finance minister. Still, inflation is at 76%, the highest since 2008, and there are shortages of medicine and fuel.

In addition to the $500 million injection, there is $800 million in exporters’ so-called nostro accounts and a further $800 million expected within 60 days, said Guvamatanga. The government will introduce measures to make the market more transparent, he said.

A fair rate for the RTGS$ currency, which doesn’t trade outside Zimbabwe, is between 3.5 and 4 per dollar, he said. The currency traded at 3.48 per dollar in the interbank market on Monday and at 6 per dollar on the black market.

© 2019 Bloomberg L.P

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

COMMENTS   1

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up for FREE

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

SHOP NEWSLETTERS TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company:
server: 172.17.0.2