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RBZ takes MDC advice on redollarization but....

by Dr Tapiwa Maji-Marefu Mashakada Economist and MDC Secretary for Policy and Research
27 Mar 2020 at 09:30hrs | Views
At long last it has happened. The RBZ has finally announced in its 26th March Monetary Policy announcement that with immediate effect the USD can now be officially used as legal tender for domestic transactions. Which means consumers can choose to pay in usd or ZWL$ as the please.

The RBZ has smelt the coffee and done the right thing. As Advocate Nelson Chamisa and I  opined many times, the economy had already de-dollarized on its own. Now we are appealing to retailers to do proper dual pricing of goods and services based on the now fixed exchange rate(not parallel market). 

Redollarization will yield  price stability as the USD is a store of value and a stable medium of exchange. 

Authorities must listen to voices of reason and react to good policy advice in good time to avoid unnecessary macroeconomic dislocations. 

The process of disinflation has now begun in ernest.

Although we take note of this latter day wisdom by the RBZ we are still concerned by the policy inconsistency of the regime.

Zimbabweans are still suspicious because they cannot trust the system. We are not certain that down the line new measures will be announced confiscating free funds as people would have responded and banked usd. Policies work because of confidence. 

We do not celebrate partial dollarization. We want a wholesale redollarization process which is backed by law. It means that a new Statutory Instrument should be enacted which decriminalizes the use of the usd for domestic transactions. 

We also call for civil servants salaries and private sector wages to be paid in usd including salaries for the army, police,secret service and prison service.  Redollarization must be holistic in order to inspire confidence. It must be a whole paradigm shift from monocurrency to multiple currency backed by legislation.

Source - Dr Tapiwa Maji-Marefu Mashakada Economist and MDC Secretary for Policy and Research