‘Zim risks redollarising’

Source: ‘Zim risks redollarising’ | Newsday (News)

Zimbabwe Ezekiel Guti University pro-vice chancellor Gift Mugano has said Zimbabwe risks going back to dollarisation in the first quarter of 2020 due to failure by the local currency to boost public confidence.

BY RUTENDO MATANHIKE

Presenting at a pre-budget briefing seminar in Harare yesterday, Mugano blamed government for putting in place reactionary policies to deal with the high levels of inflation without looking at their impact on the people, which he said had further plummeted public confidence in the local currency.

“Statutory instruments (SI) are a reactionary way of dealing with the situation; it just lessens the confidence in the currency by local people,” Mugano said.

“We cannot burn the house to deal with a rat, but we have to set traps to deal with it. In order to stop the black market, there is need to set traps to deal with them without necessarily affecting everyone else.”

He added: “We end up having an economy that is speculative than productive because of this form of reactionary policies that want to deal with problems. The policies are formed from a good basis, but they are affecting everyone even those who are not trading in foreign currency on the black market. We run the risk of going full dollarisation in the first quarter of 2020, which is not a good thing for Zimbabwe.”

Zimbabwe banned the 10-year multi-currency system in June this year after government workers demanded salaries in United States dollars which government could not afford. Since then, the country has been in a hyperinflation mode; with prices skyrocketing against stagnant salaries, a feat that has forced citizens to the wall.

Mugano said the recently introduced policies, including the SI 142 that introduced the Zimdollar, caused businesses to act in ways that protected their business investments.

Also presenting before MPs, economist Persistence Gwanyanya said: “Our major problem is that Zimbabwe is not producing. We are a consumptive economy which consumes up to 80% of our gross domestic product. We are eating into the country’s future. Currently, people have to buy their own hard-earned money, so we really cannot establish confidence in our local currency.”

The post ‘Zim risks redollarising’ appeared first on NewsDay Zimbabwe.

COMMENTS

WORDPRESS: 4
  • comment-avatar
    ace mukadota 1 month ago

    The USD is the only way to go comrades. The RBOZ have shown they do not have the knowledge to run a money system. They showed us that in 2008 and are repeating the problem once again – when will they ever learn she cried

  • comment-avatar
    Tendai 1 month ago

    Inflation is caused by Government , there is no other person or currency trader that causes inflation . Its caused by Government and nobody else

  • comment-avatar
    GoRobin 1 month ago

    No question about that. When the value of the Zim $ becomes less than wallpaper, which won’t be far away.

  • comment-avatar
    Jardin 4 weeks ago

    This what when you rule in fear of losing