The CZI after asking the government to lift lockdown restriction measures to allow companies to resume operation has offered the following recommendations to the government to deal with the COVID-19 economic fallout according to Newzwire.
- The government should drop all “hugely wasteful” subsidies, including those on fuel prices. The exchange should also be allowed to float freely so that it converges with the black market rate.
- Informal traders should be allowed to order goods from formal industries and use carts to distribute them directly to customers in residential areas.
- With many countries having stopped exporting medical materials, Zimbabwe should respond by building the capacity of local pharmaceutical products.
- Allow the key mining sector to keep operating.
- Zimbabwe should seek a temporary suspension of repayments of Afreximbank loans, some of which are gold-backed. “If such an extension is granted it would free up valuable resources to help keep the country going during the crisis.
- The business will be unable to pay back loans. Banks, the Public Accountants and Auditors Board and the RBZ must jointly work on a plan on the treatment of loans.
- The government should provide guarantees to allow companies to borrow and restart operations. “Companies could pay a fee for these guarantees which could then be used to fund any losses that the guarantee scheme may end up with.”
- RBZ must provide liquidity support for banks, “in line with international best practice and consistent with maintaining a stable monetary base”.
- Landlords should “show compassion” to businesses that will be unable to pay rent “for reasons which are simply beyond their control”.
- On mortgages and other secured loans, rollovers and extensions of time should be encouraged. Courts should carefully consider any foreclosures, to ensure that due consideration of the crisis can be demonstrated.
- Effective 1 April 2020, PAYE bands must be increased by 200%.
- Employers must be allowed to offset any 2% tax paid in any given month against PAYE due for that month. This will help to subsidise wages and allow employers to sustain the employees during the period of the lockdown.
- The 2% Tax Exempt transaction limit must rise from Z$100 to Z$500. The tax could also be cut to 1% to stimulate demand in the economy
- To avoid stoking inflation, these bailouts must be funded by existing local currency resources, and not by creating new balances.
More: Newzwire