eBusiness Weekly
The Zimbabwe government on Wednesday insisted that the country was not re-dollarising despite continued use of the US dollar in the economy and expressed confidence that full de-dollarisation would be achieved in five years.
In June last year the government outlawed use of multiple foreign currencies in the economy, marking the return of the Zimbabwean dollar as the official currency.
But since then several institutions and sectors such as tourism, have been given special dispensations to charge for their goods and services in foreign currency, notably the US dollar.
And while in formal trade, the currency used is generally the local dollar, the situation is largely the opposite in the informal market.
Even some government institutions like the Registrar General’s office have been allowed to charge foreign currency for passports, prompting many to conclude that the country was slowly re-dollarising, an assertion Reserve Bank of Zimbabwe Governor Dr John Mangudya denied on Wednesday.
Dr Mangudya said de-dollarisation was a process which would take years to fully implement.
“I think we are suffering in this country from definitional issues that we should not suffer from, de-dollarisation is a gradual movement from dollarisation,” he said.
“On February 22 of 2019 when Zimbabwe introduced the inter-bank exchange rate and its own currency, that was the beginning of the journey which we do believe as the Central Bank will take five years.”
Mangudya said other countries had taken up to 10 years to fully de-dollarise.
“When you talk of dollarisation, it does not mean that we lose everything. We take the benefits of the dollarisation, the benefits of a de-dollarised environment, bring them together to form one thing called a journey, it is a process,” he said.
“Some of us we do not see any contradiction to policy. We are seeing a process and the process is painful but it needs to be done. What is lacking is confidence that we need to ensure we give to the market.”
Meanwhile, Finance and Economic Development Minister Professor Mthuli Ncube said the country was generating enough foreign currency.
“In 2019 we generated about $6.8 billion and this really matched the demand, so the issue is not about supply, the issue is about the efficacy of the system, we have enough foreign currency coming into Zimbabwe,” he said.
“Clearly there is a lot of foreign currency sloshing around, but that is not the issue, the issue is the efficacy of how the system works in distributing and allocating the abundant foreign currency.” – New Ziana
