Economy to collapse if Z$ returns, minister

via Economy to collapse if Z$ returns, minister. 17 September 2014

ZIMBABWE’S economy risks collapsing if the country prematurely re-introduces the local currency, Finance Minister Patrick Chinamasa has said.

The country adopted a basket of multi-currencies in 2009 which mainly includes the United States dollar and the South African Rand, dumping its hyper-inflation ravaged local unit.

Chinamasa told legislators in Parliament on Wednesday the country would continue using multi-currencies as the economy was not yet ready for re-introduction of the local currency.

“There is need to build confidence in the economy and also build our reserves, if we do not build our reserves (and re-introduce the local currency), our economy will collapse.”

The remarks followed questions by MDC legislator Nelson Chamisa on when Zimbabwe “as a sovereign state would stop using other nations’ currencies.”

The finance minister also said Zimbabwe will introduce the special coins to address the shortage of lower denominated currency by December.

Zimbabwe, which has mostly relied on use of South African Rand coins, has faced small change challenges since the introduction of multi-currencies.

Consumers have in some cases been given sweets, pens, matches among other small items in lieu of change.

Introduction of the special coins was initially announced by the Reserve Bank of Zimbabwe in its recent monetary policy statement last month.

Chinamasa said the coins, whose value would be equivalent to the United States dollar, would be backed by a $50 million facility.