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Central bank governor Gideon Gono said in a draft economic reform programme that anchoring Zimbabwe's shaky dollar with the rand would help stabilise prices and lay the platform for recovery. But he preferred adoption of the rand as a unit of account is done informally.
Zimbabweans were already shunning their near worthless currency preferring to transact in rands or American dollars, Gono said, acknowledging collapse of the local dollar that has come to symbolise Zimbabwe's unprecedented economic meltdown.
It is imperative that Zimbabwe informally adopts the rand alongside the Zimbabwe dollar, to eliminate distortions associated with the use of multiple currencies, Gono said in a document drafted this month and which proposes drastic reforms across all key sectors of the economy.
The randfying of the Zimbabwean economy is envisaged to give substantial impetus to current efforts geared at stabilising prices. This will lay a solid foundation upon which successful economic recovery initiatives will be anchored, said Gono.
Zimbabwe stands to benefit during the World Cup tournament to be held in South Africa if it opts to use the rand. In addition, the two countries enjoy strong economic ties, making switching to the rand easier. Adopting South Africa's currency is also in line with SADC's push for a single monetary union, according to Gono.
Once Mugabe's Cabinet agrees to adopt the rand, wages and salaries for civil servants could be payable in the South African currency within a period of six months, Gono said in the document entitled: Comprehensive Economic Reforms Needed to Turn Around the Economy.
It was not clear whether Mugabe – who has frequently interfered with the market and has in the past prosecuted business officials for ignoring state price controls – has seen Gono's document yet, and if so what was his reaction.
Gono – in his go-it-alone programme – proposes to fund economic recovery through tax revenue levied in foreign exchange, estimating that Harare could raise up to US$1.7 billion annually through customs duty, valued added tax, corporate taxes and royalties from minerals.
Foreign exchange requirements for the government amount to US$350 million per month or US$4.2 billion per year, he said.
Commercial mining of diamonds at the Chiadzwa diamond field in eastern Zimbabwe could raise another US$1.2 billion per month, said Gono. Royalties from diamonds extracted becomes a key source of government revenue to finance government requirements, he said. – Zimonline
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