No to US dollar as sole currenc, says Mthuli

ZIMBABWE will not adopt the United States dollar as the country's sole currency, but will work to progressively defend the value of the local unit, while businesses that refuse to accept the Zimbabwe dollar risk arrest, Finance and Economic Development Minister, Professor Mthuli Ncube, has said.

Separately, Reserve Bank of Zimbabwe governor Dr John Mangudya has said the central bank is planning to facilitate the establishment of mobile Bureau de change in different parts of the country to ensure that the facility that allocates US$50 to members of the public per week reaches all the country's corners.

This came out on the first day of the three-day 2022 Parliamentary pre-budget seminar which opened in Victoria Falls yesterday.

Amid agitations from some Members of Parliament, particularly opposition legislators, for a return to the US dollar, Prof Ncube said the Government would not pursue such a "suicidal move".

"Colleagues we cannot adopt the United States dollar alone as the official currency. You were there before and there were queues at banks, huge foreign currency deficits and you had deflation. That was because of the US dollar. It is not a good idea, and it will be suicidal to do so."

Prof Ncube said the introduction of the local currency had resulted in many positives, including revival of industries.

"What has happened is after we introduced the local currency, industry is picking, it's about stabilising the currency. We are reforming the country, running the country under a basically dual currency regime (Zimbabwe dollar and US dollar) and of course other smaller currencies.

"We are using both currencies and you will see shifts one way or the other. We are trying to stabilise the Zimbabwean dollar and we have done well to ensure salaries are not eroded. The United States dollar is performing the role of a savings and investment currency while the Zimbabwean dollar is performing more the role of a transactional currency than an investment currency," said Prof Ncube.

He said an economy such as the Zimbabwean one is bound to have disequilibrium "because we are in an abnormal situation, but we have to continue to have two currencies because we do not have credit lines that are available to other countries".

In his presentation, Dr Mangudya said to reduce the widening gap between the parallel market and the auction rate, the RBZ will ensure "allotments of foreign currency to all bona fide transactions through the auction system including to individuals".

"The bank will continue to take appropriate measures to ensure that foreign currency allotments are settled timeously; pursue a strict monetary targeting framework to ensure that money supply does not destabilise the exchange rate, and ensure that truant behaviour in the economy is minimised," he said.

According to the RBZ, other monetary policy measures include: supporting domestic savings in local currency through instruments that compensate local currency depositors for potential exchange rate depreciation; encouraging banks to set appropriate interest rate margins for savings and time deposits to improve the appeal of the Zimbabwean dollar as a value preservative currency; as well as continue to encourage banks to streamline bank charges to stimulate foreign currency deposits by the banking public.

Speaker of the National Assembly, Advocate Jacob Mudenda, implored the Ministry of Finance and Economic Development to deal with exchange rate challenges and "find ways and means to make our local unit attractive and the currency of choice for our transactions".