One of President Emmerson Mnangagwa’s key economic policies was a return to the Zimbabwe dollar after years of using the greenback, but on Wednesday the government began undoing this, announcing that civil servants will get a US dollar allowance, probably the first sign that dollarisation was once again on the horizon.
BY FIDELITY MHLANGA
With immediate effect, the government announced, civil servants salaries have been adjusted by 50%, while they will also receive a COVID-19 allowance of US$75 per month for the next three months.
Authorities have been under pressure to increase salaries following an outcry over skyrocketing prices for goods and services stemming from the collpasing Zimbabwe dollar and run-away inflation at 785,5% as of May 2020.
The government has been quite obstinate, insisting inflation will come down to a one digit figure and that the local unit would appreciate against the US dollar, even if it was clear that this was not happening.
Treasury said it had adjusted salaries and introduced the new allowance because is was committed “to continuously review and improve the remuneration framework for civil servants, taking into account the transitory economic challenges being currently experienced in the country, which have been exacerbated by the Covid 19 pandemic”.
“With immediate effect ,all civil servants salaries will be adjusted upwards by 50%.This increase also applies to all government pension.In addition ,all civil servants will be paid a flat, no taxable Covid 19 allowance of US$75 per month,” treasury said.
Ordinary civil servants are paid an average of $3 000 at a time basic commodities largely pegged on the parallel market rate for the US dollar.
Zimbabwe outlawed the use of the US dollar only last year, declaring that it was reverting to a “mono currency” after a decade of the use of multiple currencies.
At one time, Mnangagwa boasted that the Zimbabwe currency was the strongest in the region.
The move to introduce a local currency immediately triggered a surge in inflation.
In the past five years, Zimbabwe has introduced the bond coins and notes, the curiously named RTGS dollars and the Zimbabwe dollar.