Zim dollar plunge losses hit industry

LIVINGSTONE MARUFU

Captains of industry and economists have warned that companies will find it difficult to bounce back from the recent dollar plunge amid revelations that they suffered significant losses.

The Zimbabwe dollar depreciated by 273% between May and June 2023.

However, the government put in place fiscal and monetary measures to deal with the exchange rate crisis.

“The businesses in Zimbabwe will need a miracle to recover from unprecedented losses they suffered
heavily during the past two months as most firms are either in debts or operating below capacity which em-
anated from the loss of value of the local currency.
“Companies are still struggling to stock up, hence they will need time to recover if the current stability con-
tinues,” the Confederation of Zimbabwe Industries(CZI) president Kurai Matsheza told Business Times.

In its latest report, CZI said the business will take time to rise from the fall of the Zimbabwe dollar.

“Economies can hardly survive hyperinflation. Although it (exchange rate) seems to be under control, the damage has already been done on the annual inflation front, as all the set targets are no longer achievable,” CZI said.

CZI has projected the annual blended inflation to close the year at 105% if the authorities maintain the
current stability in the market.

The annual blended inflation rate for the month of June 2023 was 175.8%, gaining 89.2% percentage
points from the May inflation rate of 86.5%.

CZI said inflation rate targets will not be achieved.
“This [10-30% inflation target] is definitely not going to be realised as Price Index was to remain constant
all the way up to December, the end of year inflation would be 105%.

“This means that annual blended inflation will still be in triple digit figures come December 2023,” CZI
said.
Economist Gift Mugano told this publication that there was a need to come up with holistic measures to
deal with inflation.

“As long as the government maintains short term financing, it will certainly backfire in terms of inflation point of view and exchange rate spiral point of view as at one point the authorities will pay contractors and they will come back to the parallel market looking for the greenback,” Mugano said.

Another economist who commented on condition of anonymity told Business Times: “The plunge has left businesses on the brink as the balance sheets were eroded by inflation and it will take years to recover, only if stability continues.”

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