Govt, business tiff escalates

CLOUDINE MATOLA

Permanent secretary for the Ministry of Finance, Economic Development and Investment Promotion, George Guvamatanga has made shocking claims that local companies are underdeclaring their United States dollar cash transactions ,as the government -business impasse escalated, Business Times can report.

It comes at a time when business lobby groups have been pressuring the Treasury to release approximately  US$48m that it  pledged  to  local businesses, which are  facing  mounting threats  from  deteriorating  economic conditions.

In addition to a host of other problems, businesses are grappling with chronic foreign currency shortages , rising costs of production and currency shocks,  all of which are causing  their profit margins to shrink.

Now,  the Treasury has reversed course and  resolved not to release the pledged funds, according to Guvamatanga who spoke yesterday at a business meeting organised by the Economic Society of Zimbabwe held in the capital Harare.

Instead, Guvamatanga has advised local businesses to use their  United States dollars, which he claimed are stashed in their safes.

Guvamatanga further asserted that local companies swiftly dump local currency to obtain much sought-after greenbacks when they sell their products  in Zimbabwe Gold (ZiG).

“…we have actually studied this and what we have seen with most of these companies is that they are not declaring their cash sales,” Guvamatanga said.

He continued: “When they then sell in ZiG they quickly offload and put their (hard currency) cash under the table.

“I have had the opportunity personally and I know each and every corporate that operates in this economy inside out.

“I can claim that I’ve been watching them for years. I know their cash flows. I know how they operate.

“I looked at the list yesterday. On the top of the list there were beverage manufacturers, there were telecom companies and there were also millers on that list.

“There were also contractors, some of whom I just paid in US dollars the previous day but they were on that list.  I went through that list and I said to the governor (of the Reserve Bank of Zimbabwe,Dr John Mushayavanhu) if he was to give me that list of the top 20 who were demanding US$48m, I would issue foreign currency to one customer the rest I would ask them to go back to their safe cash flow deposits and take out the cash that’s there.

“I know it’s there and I can challenge all of them on that top 20 so I don’t want to mention them here. I don’t want to name them here but maybe on another platform I will name them but I know all of them that over and above the small deposit they are indicating in their account, they are safe deposit boxes somewhere along Harare Drive.

“They have got more money than what they demand from the government, so I said to governor (Dr Mushayavanhu) go and tell them that the permanent secretary (Guvamatanga) said he knows that you have money,  go and use it.”

Guvamatanga added that the market has enough foreign currency for  those who are truly in need of hard cash.

“The Zimbabwean market, we do have adequate foreign exchange available for those who need it and for those who deserve it.

“Why am I saying for those who deserve it? Because we have seen over the course of the past three months, big corporations whom we know are selling in (hard currency) cash, but when you go to their banks, you do not see any cash deposits.

“But yet, they are the first ones to actually demand foreign currency from the willing buyer, willing seller market, while they are actually keeping their foreign currency in cash. So that abuse of the market is not acceptable, but we are aware of those corporates, and we will actually encourage them that, look, they should not abuse the market, they should not abuse the Reserve Bank of Zimbabwe, they should not abuse government by demanding foreign currency, while they are keeping lots of foreign currency in their safes,” Guvamatanga said.

In addition, Guvamatanga said foreign currency receipts grew by 9.5% to US$6.2bn for the six months ended June 30, 2024 from US$5.6bn recorded prior comparative period.

He said this growth was due to export receipts from gold, agriculture commodities, manufactured products as well as diaspora remittances.

“In line with this improvement in foreign currency receipts, preliminary estimates indicate that the current account recorded a surplus of US$19.2m in the first half of 2024, a turnaround from the deficit of US$13.8m recorded in the same period last year.”