Finance Minister Mthuli Ncube and Treasury Permanent Secretary George Guvamatanga have defended the proposed levy on US-dollar cash withdrawals, insisting it is necessary to curb the flow of money from the formal banking system into the informal economy. Their comments come amid warnings from banking experts that the tax will make banking more expensive and discourage deposits.
Speaking during a post-budget discussion, Guvamatanga argued that the bulk of cash circulating informally originates from banks, and the levy is meant to slow that outflow. He said individuals withdrawing up to US$500 and corporates withdrawing up to US$5,000 will not be taxed, insisting the policy is “considerate” and targeted at large cash movers.
“As a corporate, why would you want to withdraw more than US$5,000 in cash?” he asked. “What are you doing with US$10,000 walking around in your briefcase?”
Guvamatanga rejected claims that the levy will discourage banking, saying the money is already in the banks but is “exiting one way” into the informal sector, where it is not returning. He added that banks earn up to 20% of their income from withdrawal fees and suggested government may need to explore revenue-sharing arrangements to ensure sustainability.
Finance Minister Professor Mthuli Ncube emphasized that the goal is to “discourage the migration of cash from the formal system into the informal system,” arguing that the levy is justified and aligned with normal transaction patterns. He also said civil servants and most ordinary account-holders should not be affected if they keep withdrawals under the US$500 threshold.
However, banking experts have warned the policy may have the opposite effect. According to BancABC’s James Wadi, Zimbabweans are already withdrawing US$346 million per month from ATMs, up from US$260 million at the start of the year — a sign of deep mistrust in the banking system. He cautioned that the new tax will only increase withdrawal costs, pushing even more people away from formal channels.
