Zim central bank urges govt incentives on diaspora remittances

Zim central bank urges govt incentives on diaspora remittances

By Xinhua

HARARE: The Reserve Bank of Zimbabwe (RBZ) on Monday called on the Zimbabwean government to offer fiscal and non-fiscal incentives to diaspora investments, given their huge contribution to the country’s total foreign currency inflows.

Diaspora remittances have emerged as Zimbabwe’s largest source of foreign currency, consistently surpassing foreign direct investment, portfolio investment and official development assistance since 2009, RBZ Governor John Mangudya said in a statement issued Monday after a meeting of the RBZ Monetary Policy Committee (MPC) Friday.

Reserve Bank of Zimbabwe governor John Mangudya

He said diaspora remittances alone contributed 16 percent to the country’s total foreign currency inflows of 9.44 billion U.S. dollars as of Oct.31, 2023.

“Thus the MPC underscored the need to leverage diaspora remittances for development as part of a broader package of measures to cushion the economy from recurring global shocks,” he said.

“The MPC resolved to recommend that the government extends the fiscal and non-fiscal incentives for FDI to diaspora investments in the country, given the primacy of diaspora remittances in the economy,” Mangudya said.

He said that considering the prevailing macroeconomic environment, the MPC also resolved to maintain interest rates at current levels, including the bank policy rate of 130 percent.

The MPC also underscored the need for the government to continue increasing the proportion of taxes that are settled in local currency to increase demand for the Zimbabwean dollar and sustain the exchange rate, Mangudya said.