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Sunday, 9 June 2019
Zim to abolish multi-currency
PRESIDENT EMMERSON Mnangagwa has revealed that government had resolved to abolish the multi-currency system and ensure that all transactions are conducted using a local currency to be introduced into the market before year-end.
Addressing Southlea Park residents in Harare after a clean-up exercise yesterday, Mnangagwa said the multi-currency regime had been adopted to deal with the hyper-inflation experienced between 2008 and 2009, but there was no longer any basis to retain it.
Mnangagwa said the multi-currency regime had served its purpose and would soon be put to bed, an announcement likely to trigger panic in the already jittery financial market, where the RTGS$ is fast long value against the US$ each day.
“In 2008-2009, for those who were older, you will remember that our money (Zimbabwe dollar) collapsed to a point that one would wake up as a billionaire after going to bed a millionaire. Others became trillionaires,” he said.
“So, the government at that time sat down after seeing that our money was now valueless and came up with a basket of currencies, which included the American dollar, (South African) rand, (Botswana) pula and other currencies used to trade locally, so that we solve the problems which had befallen us at that time.
“But we can’t walk our journey without our own currency. There is no country without its own currency. South Africa has its rand. If you go to South Africa with an American dollar, a euro or any currency, you go to the bank and change it and get the rand. This is what you use in shops in that country. If you go to Botswana, Malawi or Zambia, you do the same.”
Mnangagwa said the current price fluctuations being experienced in the market were being caused by the absence of a local base currency.
“The country can’t prosper going ahead without its own currency. Currency from other countries is printed by those countries. We only get it if we export, then you get paid in foreign
currency, or those with friends and relatives in the diaspora, you will receive it,” he said.
“As a country, we must have our own currency. That journey, we have started. We have started that journey because right now you go and sleep when the US dollar is trading at 1:5 (against ZWL$), the following day you wake up, it will be trading at 1:7 and it (ZWL$) keeps losing value and after they have said that, then they increase prices citing the exchange rate,”
The new currency, according to Mnangagwa, will end 11 years of a multi-currency regime.
“We are going to a point where it will be illegal to trade using the American dollar or (British) pound locally. You can keep it in your pocket, but when you want to buy, you will
have to change it to local currency,” he said.
“In our plan as government and our economics, we are predicting that by year-end, the things that I am speaking of will have happened.”
Former Finance minister Tendai Biti, speaking in London early this week said the only way to save the Zimbabwean economy was to re-dollarise, adding a local currency could not be sustained given the poor levels of productivity.