Zimbabwe says determined to successfully de-dollarize

HARARE (Xinhua) -- The Zimbabwean government is determined to ensure that the country successfully de-dollarizes after a decade of using the U.S. dollar as its main trading and transacting currency, Finance Minister Mthuli Ncube said Friday.

Mthuli Ncube

Addressing a press conference, the minister acknowledged that de-dollarizing was not an easy task, but vowed that enforcement and compliance will be pursued to ensure no use of the U.S. dollar for unauthorized transactions.

The Zimbabwe government abandoned the hyperinflation-ravaged national currency in 2009 in favor of multiple currencies that included the U.S. dollar, British Pound, Euro, Australian dollar, Chinese Yuan and Japanese Yen.

However, of all the foreign currencies, the U.S. dollar became the dominant currency of trade and transacting in the country.

But in June this year, government suddenly re-introduced the Zimbabwe dollar as part of currency reforms.

The local currency is currently made up of electronic money known as Real Time Gross Settlement (RTGS), bond notes and coins and new dollar notes that were introduced last week.

But as the new notes remain in short supply and continue to depreciate against the U.S. dollar, most businesses are reportedly continuing to charge their goods and services in the U.S. dollar.

Ncube said Zimbabweans had become used to the green back such that it will not be easy for them to quickly forget it.

“It is not correct that the local currency has been rejected. People are desperately looking for the money. It’s not also easy to de-dollarize. There are too few cases around the world where they have de-dollarized successfully,” Ncube said.

Meanwhile, deputy minister of finance Clemence Chiduwa told the same press conference that the government was considering coming up with tight measures to deal with the thriving black market for foreign currency.

He said one such measure would be designating a few commercial banks that allow depositors to freely withdraw their money from Nostro foreign currency accounts to purchase goods abroad.

But upon return, the individuals would be requested to declare the source of foreign currency and if it’s not from official sources, such goods would be forfeited to the State.

He lamented the current scenario where businesses are now indexing the price of goods and services against movements of the exchange rate on the parallel market.

“Our inflation rate at the moment is now being driven by expected movements in the parallel market rate.

“What is just needed is to ensure that all the laws that are supposed to guide the operations of economic agents are in place. What is needed on our part is compliance and enforcement,” he added.

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