#mugabe’s Party Weighs Reintroducing Zimbabwe Dollar

via Mugabe’s Party Weighs Reintroducing Zimbabwe Dollar – Bloomberg By Brian Latham Apr 23, 2014

Zimbabwe is weighing the reintroduction of the national currency it abandoned in 2009 in favor of the U.S. dollar as it struggles to meet its monthly wage bill, three members of the ruling party’s decision-making body said.

While the revival of the Zimbabwe dollar would allow the government to print money to meet its needs it could damage the popularity of President Robert Mugabe’s Zimbabwe African National Union-Patriotic Front, said the people, who asked not be identified because the discussions are private. Patrick Chinamasa, the country’s finance minister, didn’t answer calls made to his mobile phone.

Zimbabwe abolished its national currency in 2009 after inflation surged to 500 billion percent the year earlier, according to International Monetary Fund estimates, and the party lost its parliamentary majority in elections while retaining the presidency. Last year Mugabe, 90, won re-election and Zanu-PF defeated the Movement for Democratic Change to regain control of parliament and end a four-year coalition government.

The party’s politburo is trying to decide whether it will do more harm to its image by reintroducing the currency and meeting its wage commitments or continuing to use foreign exchange, protecting the country’s citizens against inflation, the people said. A majority of politburo members are currently against its reintroduction, they said.

Consumer Slowdown

Between 2000 and 2008 the economy contracted by 40 percent, according to the IMF, and millions of Zimbabweans emigrated to countries including neighboring South Africa. Since the use of the dollar and other currencies including the South African rand was permitted in 2009 the economy has expanded every year.

“We’ll just die, we can’t go back to 2008,” said Jehosephat Dambadza, a furniture-maker in Harare, the capital, said in a telephone interview. “If they bring back the dollar it will quickly deteriorate to worse than then, we’ll have nothing.”

This year the economy has slowed with sales of consumer goods falling as much as 30 percent in February and revenue collection declining by a 10th, according to the Treasury. Consumer prices fell for a second month in March, while wages accounted for 58 percent of government expenditure in February. Pay increases agreed to by the government earlier this year were delayed.

Together with soldiers and police Zimbabwe has about 285,000 government workers.

Ownership Law

“It’s physically possible to reintroduce the currency,” Christie Viljoen, an economist at NKC Independent Economists in Paarl, South Africa, said in an interview. “They could force civil servants to take the Zimbabwe dollar as payment and they could force banks to stock them.”

Chinamasa said the government will alter its plan to force all foreign-owned companies to sell or cede 51 percent of their assets to black Zimbabweans. The government will now impose local ownership rules that will differ “sector-by sector,” he told reporters in Harare yesterday.

Companies including Impala Platinum Holdings Ltd. and Anglo American Platinum Ltd. have ceded stakes in their Zimbabwean assets. Banks have also been involved in talks with the government.

“Zimbabwe has big economic problems. They have a huge current account-deficit and a fiscal shortfall,” Viljoen said. “They need money from somewhere and they’re running out of options. Reintroducing the Zimbabwe dollar could be an option.”

To contact the reporter on this story: Brian Latham in Harare at blatham@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net Antony Sguazzin

 

COMMENTS

WORDPRESS: 16
  • comment-avatar
    Jono Austin 8 years ago

    ‘or continuing to use foreign exchange, protecting the country’s citizens against inflation’
    Hang on we were told that shopkeepers putting up prices was causing the inflation when inflation went through the roof! But now we are told that using zimdollars will cause inflation.
    Let’s be clear:
    1) Inflation was caused by running the printing presses red hot when there was no commensurate economic production.
    2) Inflation then is nothing more than deliberately targeted taxation against every citizen of the country.(as if they are not taxed enough)
    3)The Government has no chance of balancing their budget without massive retrenchments
    4) This they will not do so they will pay the public sector using zimdollars
    5) This will result in massive inflation as the abundance of zimdollar will make it valueless. It will also be legal tender and you will be arrested for not accepting it.
    6) As prices go up, as they must, the shopowners will be blamed ‘for causing inflation’
    7) The shelves will empty
    8) The cycle repeats

  • comment-avatar

    Stupid is too kind a word for these fools, however it may just accelerate the crash and destruction of ZANU!

  • comment-avatar
    John Thomas 8 years ago

    Zimdollar is a non starter. Let them try. It will be dead on arrival. It will be the duty of each and every one of us to reject this money.

  • comment-avatar
    Chaka 8 years ago

    Another step in the wrong direction. They can’t stop doing the wrong things.

  • comment-avatar
    Little Dorrit 8 years ago

    Govt stop wasting forex buying cars jollies stupid furniture Italian tiles for offices; bury the ghost workers ; widen tax net; repeal ExCon and indigenisation; respect rule of law etc etc etc BE HONEST AND HONOUR YOUR UNDERTAKINGS and foreign investment will roll in – no need to print money no-one will ever trust again.

    • comment-avatar

      Little dorrit they don’t understand our brand of common sense.

  • comment-avatar

    GET RID OF ZANU PF AND ALL YOUR PROBLEMS WILL BE SOLVED ,THIS COUNTRY WOULD BE BETTER RUN ,BY THE BUSINESS COMMUNITY THAN A CORRUPT GOVERNMENT WHO STEALS AND GETS AWAY WITH IT.PLAIN COMMON SENSE.

  • comment-avatar

    TALK TALK TALK………… AND DO NOTHING.

  • comment-avatar

    What ever Zanu does is disaster. Weather they bring the dollar or not the economy is doomed. They must just GO!!

  • comment-avatar
    Tendai 8 years ago

    It will be the end of everything,empty shelves,kkkkkk…. and the government will not survive. Try it and you will see where the wind blows.

  • comment-avatar
    Mlimo 8 years ago

    All this talk and no action -get onto the streets enmass and defy this govt . So they shoot a few but you are dying of hunger or aids so what. You may make a change for your children. Better to die a hero than a coward.

  • comment-avatar

    Try it zimbabwe will be doomed

  • comment-avatar
    Doris 8 years ago

    After the elections a top military chap was asked if he was pleased that ZANU got in. His response? Yah, it’s fine as long as they don’t bring back the zim dollar. If they do that then there will be an uprising. Take heed ZANU and be warned.

  • comment-avatar

    ko munoda kuti tishandise mari dzevamwe kusvika riiniko? dhora redu
    ngaridzoke ngekukurumidza tione zvekuita vasingadi vanongoshandisa zvawo us ne rand ko handiti zvinongazvechiseenza zveshe ere ?

  • comment-avatar

    Everything is imported. We are dependent in every way. A sovereign nation is zanu’s illusion. Bring back the zim dollar and every store and business will close as they will not be able to replenish stock or operate using zim dollars. Zanu will commit suicide if it brings back the zim dollar. But remember, ideology always trumps logic.