By Stanley James, Business Editor
THE move by the government to monitor companies abusing money from its contracts by channelling it into the foreign currency parallel market has been welcomed by financial sector experts.
Under the plan, the Financial Intelligence Unit, which is an arm of the central bank has been mandated with monitoring alleged illicit transactions by some contractors.
Firms found abusing money from the government contracts will now also have their operating licences cancelled as well as be prosecuted.
The development has been welcomed by financial experts.
“Using money from the public resources requires that commitment to ensure development with the primary focus being on how the entire citizenry can benefit but now if this is all about then undermining economic policies it becomes a challenge,” said Dr Lovemore Gomera, from the Governance and Accountancy Institute of Zimbabwe.
“The government is supporting the local companies on the projects because they are being given the first preference most of the projects currently in progress are mainly being done by local firms but if they engage in activities that undermine the economy then this is totally sabotaging,” said Edward Chimedza an economic analyst.
The government has raised concern that some entities being contracted for different projects across the country are channelling the bulk of their money into parallel markets thereby fuelling exchange instabilities and price increases.
The Government has also reaffirmed its commitment to pay half of work by road contractors and other infrastructure contracts in United States dollars and the other in local currency.
The move is aimed at tightening the money supply in the economy and stamping out inflationary pressures.
The past few years have seen construction activities experiencing a boom in activities, spurred by dam, irrigation and road projects.