Business / Economy
Introduction of Zimdollar alongside the Chinese Yuan feasible - Gono
13 Dec 2011 at 05:17hrs | Views
RESERVE Bank of Zimbabwe Governor Dr Gideon Gono has said the introduction of a reconstituted Zimbabwe dollar alongside the Chinese Yuan and other existing currencies is feasible and beneficial to the economy.
But some economic commentators feel the local currency should be reintroduced when the country has adequate import cover and capacity utilisation in industry increases.
The proposal was part of resolutions that came out of the just-ended 12th Zanu-PF Annual National People's Conference in Bulawayo.
Dr Gono said it was prudent to have a wider basket of currencies that would include the Zimdollar, the Yuan, US dollar, Rand and Pula that have been in use since the adoption of the multi-currency regime in 2009.
The reconstituted Zimdollar will be subject to discussion and approval by Zimbabweans and the authorities "alongside the Yuan and other currencies giving Zimbabwe a greater basket of choice than is currently the case".
Dr Gono has on numerous occasions spoken of a precious metals-backed currency, a direction other countries are now moving towards.
The resolution from the Zanu-PF conference read: "To instruct Government to work out modalities for the reintroduction of domestic currency alongside the multi-currency system in order to address the current liquidity crisis and to enable our people to carry out their transactions".
The Zimdollar was suspended in 2009 when Government adopted the multi-currency system.
In his 2012 budget statement recently, Finance Minister Tendai Biti said the multiple currency system will remain in use until the end of next year at the earliest.
Dr Gono said a bigger basket of currencies will ease liquidity challenges.
The debt crisis that the US and Europe are grappling with, Dr Gono said, were such that Zimbabwe "cannot remain blind to the fact that when the US and the Eurozone catch a cold as is currently the case, those that depend on these currencies for their national accounting will also get a cold."
Dr Gono said decisions being made in the US and Eurozone and the support being given to the respective economies authenticated the desperate measures adopted by Zimbabwe when it faced economic challenges that saw inflation rise to high levels.
"While no central bank worth its salt can ever celebrate over troubles by other central banks, one cannot help but amuse oneself over how countries that have access to international resources and institutions such as the IMF, the World Bank and others and countries with no sanctions against them are dithering on the brink of collapse at the slightest shake-up in their backyard," he said.
"Yet some of us have had to be content with worse challenges than those being experienced to date."
Dr Gono insisted the troubled economies had lessons to learn from Zimbabwe's experience.
Zanu-PF spokesperson Rugare Gumbo said the implementation of the party's resolution was only feasible after the tenure of the inclusive Government.
"Reintroduction of the Zimdollar is not possible under the inclusive Government. It is only possible after we have elections when we will have control of the finance portfolio," he said.
"Once we are in control, we will then go to Parliament and make sure that it is ratified. At the moment we can make a proposal, but (Minister) Biti does whatever he wants and this is why we are saying we should have elections."
Gumbo said Minister Biti was sabotaging the economy by making fictitious budgetary allocations to key sectors such as agriculture.
He said principals to the Global Political Agreement will deal with the issue to ensure Treasury releases money to fund key Government programmes.
"The principals will deal with that. They should make sure that they confront him in Cabinet to make sure that he releases the money," he said.
Some economists said the economic environment was not yet conducive for the reintroduction of local currency.
Bankers Association of Zimbabwe president Mr John Mushayavanhu said the country should first work to curtail the number of imports to make reintroduction of the domestic currency practical.
"When conditions are conducive we can always have our local currency in place," he said.
"We are not yet there. The only possible time we can have the local currency is when we have adequate import cover. We should work to generate adequate exports because figures presented by the Minister of Finance recently showed that we are importing more than what we are exporting, so we cannot have our own currency now."
An economist Mr Takunda Mugaga said: "If we reintroduce the Zimdollar at the moment, it is bound to be unpopular not because people do not like their local currency, but it will be competing against strong currencies such as the US dollar.
"The US dollar is a strong currency and this is why is it demanded worldwide. Our capacity utilisation as a country currently stands at 57 percent and it is still not practical to introduce the Zimdollar."
But some economic commentators feel the local currency should be reintroduced when the country has adequate import cover and capacity utilisation in industry increases.
The proposal was part of resolutions that came out of the just-ended 12th Zanu-PF Annual National People's Conference in Bulawayo.
Dr Gono said it was prudent to have a wider basket of currencies that would include the Zimdollar, the Yuan, US dollar, Rand and Pula that have been in use since the adoption of the multi-currency regime in 2009.
The reconstituted Zimdollar will be subject to discussion and approval by Zimbabweans and the authorities "alongside the Yuan and other currencies giving Zimbabwe a greater basket of choice than is currently the case".
Dr Gono has on numerous occasions spoken of a precious metals-backed currency, a direction other countries are now moving towards.
The resolution from the Zanu-PF conference read: "To instruct Government to work out modalities for the reintroduction of domestic currency alongside the multi-currency system in order to address the current liquidity crisis and to enable our people to carry out their transactions".
The Zimdollar was suspended in 2009 when Government adopted the multi-currency system.
In his 2012 budget statement recently, Finance Minister Tendai Biti said the multiple currency system will remain in use until the end of next year at the earliest.
Dr Gono said a bigger basket of currencies will ease liquidity challenges.
The debt crisis that the US and Europe are grappling with, Dr Gono said, were such that Zimbabwe "cannot remain blind to the fact that when the US and the Eurozone catch a cold as is currently the case, those that depend on these currencies for their national accounting will also get a cold."
Dr Gono said decisions being made in the US and Eurozone and the support being given to the respective economies authenticated the desperate measures adopted by Zimbabwe when it faced economic challenges that saw inflation rise to high levels.
"While no central bank worth its salt can ever celebrate over troubles by other central banks, one cannot help but amuse oneself over how countries that have access to international resources and institutions such as the IMF, the World Bank and others and countries with no sanctions against them are dithering on the brink of collapse at the slightest shake-up in their backyard," he said.
Dr Gono insisted the troubled economies had lessons to learn from Zimbabwe's experience.
Zanu-PF spokesperson Rugare Gumbo said the implementation of the party's resolution was only feasible after the tenure of the inclusive Government.
"Reintroduction of the Zimdollar is not possible under the inclusive Government. It is only possible after we have elections when we will have control of the finance portfolio," he said.
"Once we are in control, we will then go to Parliament and make sure that it is ratified. At the moment we can make a proposal, but (Minister) Biti does whatever he wants and this is why we are saying we should have elections."
Gumbo said Minister Biti was sabotaging the economy by making fictitious budgetary allocations to key sectors such as agriculture.
He said principals to the Global Political Agreement will deal with the issue to ensure Treasury releases money to fund key Government programmes.
"The principals will deal with that. They should make sure that they confront him in Cabinet to make sure that he releases the money," he said.
Some economists said the economic environment was not yet conducive for the reintroduction of local currency.
Bankers Association of Zimbabwe president Mr John Mushayavanhu said the country should first work to curtail the number of imports to make reintroduction of the domestic currency practical.
"When conditions are conducive we can always have our local currency in place," he said.
"We are not yet there. The only possible time we can have the local currency is when we have adequate import cover. We should work to generate adequate exports because figures presented by the Minister of Finance recently showed that we are importing more than what we are exporting, so we cannot have our own currency now."
An economist Mr Takunda Mugaga said: "If we reintroduce the Zimdollar at the moment, it is bound to be unpopular not because people do not like their local currency, but it will be competing against strong currencies such as the US dollar.
"The US dollar is a strong currency and this is why is it demanded worldwide. Our capacity utilisation as a country currently stands at 57 percent and it is still not practical to introduce the Zimdollar."
Source - herald
