HARARE – Not for the first time, government has ruled out adopting the South African rand as its main currency.
Responding to a question with notice in the Senate, Agriculture minister Joseph Made, standing in for Finance minister Patrick Chinamasa, said the country should work on improving productivity to stem cash shortages.
“Competitiveness is brought by increasing production and productivity in order to reduce the average cost of production through economies of scale.
“Usage of the rand means that Zimbabwe will need to earn and sell US dollars to obtain the rand from South Africa.
“So, it is very clear that the rand will have to function as a multi-currency designated in the same basket; not as an exclusive currency,” Made said.
Since January 2009, Zimbabwe has been using multiple currencies since it ditched its dollar which was decimated by record hyperinflation.
“Government does not believe that Zimbabwe’s challenges are a currency phenomenon but rather a structural challenge. In any case, the rand is foreign exchange that needs to be earned. We do not print it. It can also be externalised,” Made told senators.
Zimbabwe is currently in the throes of a severe economic problem which has seen banks running out of cash, including the coveted US dollars and the bond notes which were introduced by the Reserve Bank of Zimbabwe (RBZ) at the end of last year to ease the shortages.
Made defended the limiting of withdrawals by arguing that the practice was meant to allow more people to access cash.
“The fundamental reason of limiting cash withdrawals is to ensure that the available physical foreign exchange cash is evenly spread to the banking public given the fact that the demand for cash is higher than its supply.
“The shortage of cash is a symptom of a combination of structural challenges besetting the national economy namely fiscal deficit, current account deficit, market discipline and low productivity,” said Made.
Despite authorities injecting more bond notes into the market and increasing their weekly importation of US dollars by 50 percent, government continues to battle to stem the country’s severe cash shortages which have seen desperate Zimbabweans besieging over-stretched banks as they despairingly try to withdraw their money.