Zimbabwe formally agrees to pay civil servants in foreign currency

APA-Harare (Zimbabwe) The Zimbabwe government has formally agreed to pay civil servants foreign currency-denominated salaries with effect from this month, the state-run The Sunday Mail reports here, officially putting to rest speculation that the authorities were contemplating a full dollarisation of the economy.

The paper said the move to award civil servants foreign currency salaries was agreed during last Friday’s meeting between government and civil service worker representatives.

The chairperson of the umbrella body of the civil service staff associations Tendai Chikowore told The Sunday Mail that details of the new packages would now be worked out between the government and workers’ representatives.

"Nothing concrete has been offered by the employer, except the acceptance in principle of paying civil servants in foreign currency," Chikowore said.

The government would meet this week to discuss the proposal, after which modalities of the new grading structure would be agreed.

The move to award civil servants hard currency salaries comes barely a week after the country’s largest trade union body said its members would not accept salaries in the free-falling Zimbabwe dollars.

The Zimbabwe Congress of Trade Unions last Monday said most workers were failing to access basic services because of the dollarisation of the economy. Dollarisation is a situation when the currency of a country is replaced by or used in parallel to the currency of a more stable economy.

The term is not only applied to usage of the United States dollar but also generally to the use of any foreign currency as the national currency.

Most traders and service providers have stopped accepting the Zimdollar as a means of payment, citing the country’s runaway inflation last estimated at 231 million percent in July 2008.

The central bank has since last September licensed foreign currency shops in a move meant to improve the availability of products and cut the number of Zimbabweans making monthly trips to neighbouring South Africa, Botswana and Mozambique for groceries. – APA

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