Accessibility links

Breaking News

Zimbabwe Stock Market Halts Trading


For the second time in a year, Zimbabwe's stock market shut down, after traders clashed with the government. Peta Thornycroft, reporting for VOA, has more on the dispute at a time of extraordinary financial instability in Zimbabwe.

Zimbabwe's stock exchange, Africa's second largest after South Africa, closed down after a tax dispute with the government.

Analysts say, among the effects of the shut down was a sudden devaluation of the Zimbabwe dollar, which will further fuel the more than 1,000 percent annual rate of inflation, the highest in the world.

Stockbrokers stopped trading nine days ago, after one of the largest traders received a tax demand from the government for nearly $150,000 (US).

The bill, backdated to 2004, was, according to the stockbrokers, illegal, and a misinterpretation of the tax laws. Brokers said the contentious tax levy would bankrupt them.

As a result, the Zimbabwe Stock Exchange suspended trading, and sought legal opinion on the tax demand.

The shut down last year involved a similar dispute. It was resolved when the government backed down.

Economist John Robertson said the tax demand indicated that the government is so short of money that it is desperately looking for tax revenue. He said the government is not sensitive to, or does not understand, the role that the stock market plays in raising investment.

Zimbabwe has no foreign currency for imports and no direct foreign investment, and the government says it is forced to print money to pay expenses, such as salaries.

Late Thursday, some stockbrokers reported they had succeeded in securing a verbal agreement with Finance Minister Herbert Murerwa, and would resume trading.

Martin Matanda, head of operations at The Zimbabwe Stock Exchange, told brokers that the government would begin collecting value-added tax from June 1, but would await a court ruling before demanding back payments.