Informalisation of economy costs Zimbabwe US$1.15 Billion, research reveals

THE informalisation of the economy has cost the country at least US$1,15 billion between 2020 and 2023 and a cumulative US$3 billion with exchange rates distortions, a research paper has shown.

Presenting a research paper at the ongoing third edition of the Zimbabwe Economic Development Conference (ZEDCON) title “The fiscal costs of monetary and exchange rate distortions in Zimbabwe,” University of Zimbabwe resercher Mr Curren Pindiriri said “The analysis suggests that informalisation resulted in a loss of at least US$1,15 billion between 2020 and 2023.”

He noted that Zimbabwe has been faced with high inflation and exchange rate premiums.

“Inflation has also continued to trouble the country: year-on-year inflation has surpassed 700 percent by the end of 2023

“By April 2024, the official exchange rate had depreciated by more than 95 percent since December 2023, the parallel market gap was over 50 percent.

“High inflation and exchange rate premiums have a real cost on tax collection, which are often overlooked.”

The paper was authored by Pindiriri, Victor Steenbergen (World Bank), Jimmy Psillos (CZI)
and Marko Kwaramba.-chroncle