HARARE, Oct. 19 (Xinhua) -- Zimbabwe's tax agency has warned that worsening liquidity crisis, rising inflation and shortage of foreign currency are posing serious threats to growth of the economy.
Zimbabwe Revenue Authority (ZIMRA) board chairperson Willia Bonyongwe said rising inflation could derail revenue collection efforts by the tax agency which would in turn affect funding of public programs.
Zimbabwe's inflation has been rising since February, reversing a prolonged deflationary period which started in February 2015.
Last month, the country recorded a sharp rise in annual inflation to 0.78 percent from 0.14 percent in August following arbitrary price increases of most basic commodities.
The price increases were triggered by false social media messages that alleged impending shortages of basic goods and fuel due to prevailing foreign currency shortages.
The messages led to panic buying of the goods and fuel by consumers, resulting in fuel and some commodities such as cooking oil temporarily running out of supply.
The government is projecting inflation to rise to between 2 percent and 3 percent by year end.
"As a country using the U.S. dollar as an anchor currency, this rate is very high and will worsen Zimbabwe's export competitiveness. Sanity must prevail to avoid this," Bonyongwe said.
She said the solution to curbing inflation lied in increased export production to generate foreign currency and improve liquidity.
The ZIMRA boss cautioned against price controls by government, saying these "had failed before and will fail again."
Meanwhile, the tax agency surpassed its revenue target for the third quarter of 2017 after gross collections stood at 1.03 billion U.S. dollars, 19.25 percent above the target of 863.56 million dollars.
Net collections, after deducting 62.05 million dollars in refunds, amounted to 967.76 million, 12.07 percent above target.
"The positive performance is attributable to higher collections in value added tax on local sales and imports, individual tax, excise duty and company tax," Bonyongwe said.
