Gold, Tobacco Get Shot in Arm

Source from:  herald.co.zw Business Editor 08/01/2007

GOLD producers were yesterday given another shot in the arm by the Reserve Bank of Zimbabwe while the tobacco support price was increased to $55 000 per kilogramme from $40 000 with effect from July 1. The gold support price for June has increased to $1 million from $350 000 per gramme in retrospect. This comes hardly a week after the central bank increased the support price to $3 million with effect from July 1. Therefore, all deliveries for the month of June will receive the new top-up figures for that month. This effectively means that from April 26 to May 31 the gold support price was $350 000 per gramme and from June 1 to June 30 it was $1 million. It was then increased to $3 million per gramme effective July 1. Those that had opted to receive 60 percent of their proceeds in foreign currency but now wanted to be paid in local currency could do so at $3 million per gramme. Reserve Bank of Zimbabwe Governor Dr Gideon Gono yesterday said the central bank was, in this regard, fulfilling its commitment of gradual reviews of the price to enhance viability in the sector. ". . . also the lapsed time between the April, 2007 enhancement and recent revision, (the central bank) has taken the position of retrospectively uplifting the support price applicable for the month of June, 2007 from the then prevailing Z$350 000 per gramme to Z$1 million per gramme, with the back-payments being done with immediate effect to those who delivered to Fidelity Refineries," said Dr Gono. For tobacco, the new top-up benefit would me made on a pro-rata basis, with every kg that fetches a price of US$1,50 receiving $55 000 as top up. This would be backdated to July 1 and paid through the auction floors. The new top-up benefit is expected to bring more cash into the pockets of tobacco growers as they prepare for this season's tobacco crop. The top-up benefit was last reviewed in the Interim Monetary Policy Statement announced in April in Bulawayo when it rose to $40 000 per kg from $5 000. Dr Gono said the latest measures were part of initiatives by the central bank to boost tobacco production. At least 80 million kg are expected to be delivered to the auction floors in the current season with efforts already underway to increase production for the 2007/08 season. Tobacco and gold are key foreign currency earners whose production has slumped significantly in the last few years. Gold, in particular, has been prone to smuggling and other forms of indiscipline that have robbed the exchequer of millions of foreign currency, at one stage estimated at US$50 million a week. However, the new support prices and continued efforts targeted at reviving the sectors, are expected to bear fruit. Enditem