Wed, 19 Jun 2019

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 $8m (about at R115m) a month, Guvamatanga said by phone on Monday. "A quantified, budgeted and targeted subsidy is a good subsidy," he said.

The measure is introduced as the central bank and finance ministry injected $500m 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 $500m injection, there is $800m in exporters' so-called nostro accounts and a further $800m 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.

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