Plot to block US dollar use in Zimbabwe

THE United States has set in motion a plan to "collapse the Zimbabwean economy overnight" by restricting US dollar imports into the country, the Sunday Mail reported.

Part of this plot involves violent street protests against the scheduled introduction of bond notes aimed at easing US dollar cash shortages that began in April 2016. However, US Zimbabwe Embassy spokesperson Ms Karen Kelly could not be reached for comment yesterday.

But Finance and Economic Development Ministry and Reserve Bank of Zimbabwe officials told our Harare Bureau they had received information that the protests were tailored to force the RBZ to abandon bond notes.

And once the bond notes are shelved, the sources said, Washington would impose restrictions on greenbacks finding their way into Zimbabwe.

In 2015, the Bank of America stopped supplying currency to Angola and South Africa, arguing lax regulations there provided fertile ground for money laundering. This shook Angola's economy, which, however, quickly absorbed the shock with its currency, the kwanza.

A source said, "All these demonstrations calling on authorities to abandon the bond note idea are part of a calculated plot to collapse the economy overnight. They envisage a situation where Zimbabwe will just wake up one morning and the US would have banned importation of US dollars into Zimbabwe.

"Those Western-sponsored protests against bond notes over the past two months were aimed at derailing Government efforts to have a fall-back currency. In the event that we do not have a fall-back currency in circulation and the West puts restrictions on exporting its currency to Zimbabwe, there will be total anarchy."

Another added, "We could wake up without a currency to do trade (with). Bond notes will act as a cushion to avoid such a scenario if we are economically sabotaged. They have tried to propagate the anti-bond notes stance by purporting that by introducing bond notes, Government will be bringing back the Zimbabwe dollar through the backdoor.

"This is all because the West understands that once we have a fall-back currency, they cannot cripple the economy overnight. Bond notes will act as a cushioning currency if their intended plan to restrict exportation of the US dollar to Zimbabwe (goes ahead). The agenda is known."

Finance Minister Patrick Chinamasa could not be reached for comment, while RBZ Governor Dr John Mangudya would only say, "Preparation for introduction of the bond notes is progressing well and remains work in progress."

University of Zimbabwe Economics lecturer Mr Edgar Muhoyi said: "The ban will be a major blow to the economy and will serve to worsen the liquidity crisis. Most transactions in Zimbabwe are carried out in hard cash, so we will clearly spiral into a crisis.

"Taken against the background that Zimbabwe is not exporting much, we would have no avenue of bringing in hard currency into the economy. The restrictions can be managed if we were exporting a lot, but that is not the case as it stands. Our financial sector will collapse as a result of the shortage of liquidity in the economy."

Zimbabwe introduced the multi-currency system in January 2009 following the collapse of the Zimbabwe dollar which had been pummelled by hyperinflation in 2007-8.

That currency basket has the South African rand, British pound, US dollar, Chinese yuan, euro, Botswana pula, Indian rupee, Japanese yen and Australian dollar. However, the US dollar, being the globe's dominant medium of exchange, attracts the greatest demand both domestically and regionally. This and externalisation, a high trade deficit and a diminishing savings culture have precipitated US dollar cash shortages. The RBZ is importing at least US$10 million weekly and wants to introduce bond notes to help ease the shortages.