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'Zimdollar here to stay'

by Staff reporter
17 Nov 2023 at 05:06hrs | Views
GOVERNMENT says it will announce a clear and transparent roadmap towards de-dollarisation to avoid shocks that may hurt the economy and drive citizens deeper into poverty.

The country was due to end dollarisation in 2025 to put to bed the multi-currency regime currently in place, but President Emmerson Mnangagwa has since given the regime a lifeline to 2030.

Government re-introduced the local currency in 2019 after a decade of dollarisation, but the local unit has failed to hold its own.

This has seen some service providers charging their goods and services exclusively in United States dollars to hedge against losses while banks stopped lending in the greenback to avoid write downs.

Finance deputy minister Kudakwashe Mnangagwa told parliamentarians on Wednesday that the markets will be kept abreast, adding that extensive stakeholder consultations were being held, about the de-dollarisation strategy.

"As government and as Treasury, we are committed to coming up with a roadmap. The road to de-dollarisation will not be an event, but rather a process," Mnangagwa said.

"You find that there are measures that the country is putting in place. This is part of the de-dollarisation programme.

"After thorough consultations with all stakeholders, the market will come up with a published roadmap that will be available to all, but to answer in a nutshell, there is no definitive date, it is going to be a process."

Mnangagwa said the transition to a mono-currency would be gradual.

"It is not going to be a big bang," he said.

"There has been some stability, both in the currency exchange rate and prices. This is due to the policies that are in place which we endeavour to sustain as Treasury just to ensure that we do not have spikes in your exchange rate which also fuel inflation."

However, Mnangagwa said the Zimdollar was prone to attacks by economic predators.

"We are going into bonus season and you will find that just because of that fact, there is someone who might want to become a predator on civil servants' salaries, that has nothing to do with fundamentals, but some of the behavioural challenges which we have which we will be addressing. "

Zimbabwe switched to dollarisation in 2009 following the collapse of the local currency in 2008 during the country's worst hyper-inflationary era.

Attempts to return to exclusive use of the Zimdollar has spooked the markets and affected exchange rate stability.

"What we are facing in Zimbabwe is very uncharted territory," he said.

"Ideally, we would want to set the record today, but I can assure you that even if all fundamentals are right, that behavioural challenge that we have in the market will still distort it.

"So, what we need to do is to do a consultative process as I have mentioned, to make sure that all players, bit by bit, buy into the de-dollarisation plan and we reach where we want to get without disrupting the market," he added.

Source - newsday