Harare (New Ziana) – The government is sticking to its five-year de-dollarisation plan, and is confident that fiscal and monetary measures put in place to stabilise the local currency will succeed in the long term, the Reserve Bank of Zimbabwe said on Thursday.
Zimbabwe re-introduced its own currency in 2019 after a decade-long hiatus and put in place a five-year de-dollarisation roadmap detailing how the economy would transition over the period.
The roadmap, among other things, permits the continued use of the US dollar and other foreign currencies over the transitional period.
But, because of the US dollar dominance and preference in the local market, there is resistance to the Zimbabwe
dollar, while pricing based on parallel market exchange rates have led to sharp increases in the cost of goods and services pegged in local currency.
This has led to calls by some, for full dollarisation.
But, Reserve Bank of Zimbabwe governor John Mangudya,vowed on Thursday the local currency was here to stay, warning that its removal would hurt the economy.
“If we remove the local currency from the equation, we will not grow this economy,” he told captains of industry at the annual Confederation of Zimbabwe Industries economic outlook symposium.
“There is a misconception that because the economy earned US$9.7 billion from exports (in 2021) then the economy has got enough foreign currency for use by everyone. It is there but it is not yours, you cannot use money which belongs to someone else, that money belongs to the likes of Zimplats, the likes of Unki, the likes of government. It is not mine, I cannot touch that money, it is in the banking sector but it belongs to the owners of the foreign currency.”
Mangudya said de-dollarisation would not happen overnight, but gradually.
“We are on a journey to de-dollarisation. We are in a transition and using the dual currency currently but we should never forget where we are heading, we are heading towards de-dollarisation there is no country which can develop without its own currency,” he said.
Mangudya conceded that exchange rate volatility remained a challenge, but pointed to several other positives happening in the economy.
“The banking sector is well capitalised to support economic activity. Monetary measures are being complemented by fiscal policy, there is good co-ordination and harmony so we are going to stay the course,” he said.
Speaking at the same symposium, economist Joseph Mverecha supported government interventions to ensure a stabilised local currency.
“Authorities must do everything to prevent the loss of the local currency. I know people, even some captains of industry, think we must now go for dollarisation, but I think if we took that route we will destroy this economy’s potential,” he said.
In an effort to encourage wider use of the local currency, the government recently allowed miners to pay up to 50 percent of their royalties in Zimbabwe dollars, while all duties and taxes due on the importation of designated motor vehicles are to also be paid in ZWL up to a limit of 50 percent.
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