The Ministry of Finance and Economic Development issued payment of ZW$184 billion to various suppliers of ongoing development projects despite freezing out some “rogue” suppliers who had inflated their invoices.
The government has since embarked on a value for money process meant to ensure Treasury pays true market prices for goods and services acquired.
In a media brief this morning, Finance and Economic Development Minister, Professor Mthuli Ncube said whilst government supply contracts have been undergoing a validation exercise, Treasury have continued to pay up on those that meet the Value for Money criteria.
“In the last six weeks, government has paid a total of ZWL184 billion dollars.
“These payments have been made to various players in the market so it is not a fact that Government is not paying for goods and services. As we move ahead to implement the Value for Money process, we are committed to honoring all our obligations provided that they are priced correctly in the public interest and such payments will not adversely impact the exchange rate and cause inflation,” said Prof Ncube.
The payments have been paid as follows: week ending 12 August 2022 ZW$ 25,376,799,988.14. Week ending 19 August 2022 ZW$ 32,237,301,353.79; week ending 26 August 2022 ZW$ 16,700,762,707.89; week ending 02 September 2022 ZW$ 22,797,581,511.46; week ending 09 September 2022 ZW$ 10,816,796,786.53 and week ending 16 September 2022 ZW$ 63,578,550,545.63.
The Minister said the suspension of all payments to on contracts that are clearly based on speculative forward exchange rates has seen a rapid correction in the market with the official exchange rates on the auction and the WBWS exchange rates in the banks converging between ZWL605/ 1 USD to ZWL660 /1USD.
“Government is committed to the restoration of price and macro stability and the elimination of forward speculative pricing is a necessary step towards removing adverse inflation expectations, which have been feeding lack of confidence,”
“Following the implementation of the value for money process we expect all pricing in the market to be based on economic fundamentals. Speculative behaviour will no longer be accepted nor tolerated.”
Some examples are a tender for laptops which purportedly cost close to USD10 000 each which is way above general market prices for high specification laptops, whilst in other spheres a 2kg pack of chicken was claimed to be worth USD30 when market prices is a maximum USD6 for the same.
“We have seen a bag of cement being priced at an equivalent of USD18 per bag on some construction projects,” said the Minister.
Treasury however admits that the reforms will have an adverse effect on economic growth this year as government slows down its procurement.