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Dr John Mangudya

Prosper Ndlovu Buisness Editor
RESERVE Bank Governor Dr John Mangudya says the central bank will soon be importing special coins as part of measures to buttress the multiple currency system but ruled out an imminent return of the Zimbabwean dollar describing it as tantamount to “economic suicide”. Presenting his mid-term monetary policy statement on Monday, Dr Mangudya said the multiple currency system adopted in 2009 would remain in force until such a time the country’s economy was stable enough to permit a rebirth of the local currency.

“Government’s consistent and official position is that the country is using the multiple currency system. This position has been well articulated by the Minister of Finance and Economic Development, Hon Patrick Chinamasa, and is the bedrock under Zim-Asset,” Dr Mangudya said.

“The local currency would only be resuscitated when the country’s foreign exchange reserves and domestic production levels are significant enough to sustain its rebirth.”

He said the current low levels of production within the economy and the high levels of imports were not conducive for the return of the local currency.

He warned: “It would therefore be economic suicide for government to do so without foreign exchange reserves to anchor the local currency.”
Dr Mangudya said RBZ’s move to import coins would tame price distortions following concerns by the Retail Association of Zimbabwe, businesses and individuals across the nation who complained over discrepancies in prices.

At the moment the country does not have coins for the dominantly used United States dollar.
The RBZ chief said lack of change within the economy was a serious problem to the extent that sweets and tokens/vouchers were now being issued as change to the general public.

“Barter trade is also in use especially in the rural areas. In order to ameliorate this problem of change and it’s unintended consequences on the price levels in the economy, the Reserve Bank will be importing special coins of 1c, 5c, 10c, 20c, and 50c whose values would be at par with the US cents,” said Dr Mangudya.

“Rand coins of 10c, 20c, 50c, R1, R2 and R5 are also being imported to buttress the multiple currency system, which is dominated by United States dollars and rand. These coins will be distributed to business through normal banking channels from the Reserve Bank.”

He said RBZ through its bank use promotion unit would monitor that the coins were utilised as change to bring decency to the economy.
Dr Mangudya said the ongoing deflation under the multiple currency system had necessitated inevitable commodity price reduction.

“A lot has been said and written on this subject matter. Our considered view is that deflation, which is defined as the reduction in the general level of prices in an economy, was inevitable in the Zimbabwean economy. The prices of goods and services that are being charged in Zimbabwe continue to be higher than those charged within the region and international markets, thus the reduction in prices was an unavoidable price correction process or a self-adjustment process for companies and individuals to remain in business in a tight liquidity economy.”

Dr Mangudya noted the increase in Diaspora contribution to economic development saying remittances from the Diaspora clocked $412 million for the first half of the year.

The figure exceeded by far the $67 million from Foreign Direct Investment (FDI) for the same period.
“It is against this background that Homelink will be revamping its operations to provide tailor made products and services that meet the needs of the Diasporans,” said Dr Mangudya.