Zimbabwe to dump rand, US dollar

Zimbabwean will do away with the multiple currency regime - which includes the rand, US Dollar and other units - currently accepted as legal tender alongside the RTGS$ consisting of bond notes and electronic balances, President Emerson Mnangagwa said on Friday.

The state broadcaster, Zimbabwe Broadcasting Corporation (ZBC) also reported that Zimbabwe would introduce its own currency before the end of the year.

At an environment clean-up campaign in Harare South constituency Mnangagwa said: "We are getting to the point where we say even if you have US dollars or British pounds in your pocket it's yours but when u want to buy you exchange it and use our currency, you will be informed more about that."

He it was difficult for Zimbabwe to progress economically while using foreign currency as legal tender.

Zimbabwe was only getting forex earnings after export sales, diaspora remittances and from limited investments inflows. Companies and investors have been limiting exposure to Zimbabwe as the financial crisis in the country occasion challenges in remitting dividends and moving other funds from local markets.

"We have started that journey to have our own currency. We are seeing a lot of fluctuations in the local rate of forex. As a consequence of that, we are witnessing price increases," Mnangagwa said.

The president, whose economic reform measures have been criticized and are now being monitored by the International Monetary Fund (IMF), defended the country's austerity measures, highlighting that these would help fix the ailing economy.

"I said we were instituting austerity measures to help our economy stabilise. That's why we said Zimbabwe is open for business, but Zimbabwe is not open for abuse," he said.

Analysts at IH Securities said in an economic note on Zimbabwe on Friday that Mnangagwa's administration was faced with "an implementation risk of its austerity measures due to its traditional temperament for populism and tolerance towards corrupt interest groups".

The analysts noted that subsidies for specific goods or sectors such as fuel or medicine had to be channeled through the fiscal budget. The IMF is supportive of Zimbabwe's social safety nets measures aimed at ring-fencing the poor against inflation and the current austerity measures.