Government to announce de-dollarisation plan
Nqobile Bhebhe, [email protected]
GOVERNMENT, after thorough consultations with all stakeholders, will announce a clear road map to de-dollarisation as it is a process and not an event, Finance, Economic Development and Investment Promotion Deputy Minister David Mnangagwa said last week.
Deputy Minister Mnangagwa said at present, there is no definitive date stressing that “it is not going to be a big bang.”
In October, President Mnangagwa extended the duration of the multi-currency regime beyond the initially planned cut-off period of 2025 to 2030 by which Zimbabwe is expected to have achieved upper middle-income status, in terms of Section 2 of the Presidential Powers (Temporary Measures) Act.
The development was seen as a major boost to investor confidence and ushering in certainty to planning for businesses given that some financial institutions had started scaling down US dollar lending over concerns regarding the fate of foreign currencies after 2025.
In June last year, the Government promulgated Statutory Instrument (SI) 118A of 2022, which provided for the multi-currency system to run for five years.
The SI entrenched into law the multi-currency regime for the entire period of National Development Strategy 1 (NDS1), a five-year economic blueprint adopted by the Government in 2020 and runs through to December 2025.
Zimbabwe used the multi-currency regime between 2009 and 2019, and thereafter a combination of foreign and domestic currencies as it explored strategies to allow for the sustainable introduction of exclusive use of the local currency.
The country scrapped the exclusive use of the domestic currency in February 2009 due to hyperinflation caused in part by the impact of economic embargoes imposed on Harare by Western countries in 2001 after the Government implemented the land reform programme meant to correct the skewed land ownership which favoured few white farmers.
Responding to legislators in the National Assembly last week, Deputy Minister Mnangagwa said both Government and Treasury are committed to coming up with a roadmap.
“I think the question when we would assume that is when there is a date. As Government, and as Treasury, we are committed to coming up with a roadmap. The road to de-dollarisation will not be an event but rather a process. You find that there are measures that the country is putting into place.
“This is part of the de-dollarisation programme,” he said while responding to Bikita South Member of Parliament, Cde Energy Mutodi.
He added, “After thorough consultations with all stakeholders, we will come up with a published roadmap that will be available to all, but to answer in a nutshell, there is no definitive date, it is going to be a process. It is not going to be a big bang.
“We are here, but gradually we are getting to mono-currency,” said Deputy Minister Mnangagwa.
He added that the extension of the multi-currency regime to 2030 was within “our de-dollarisation plan”.
“That means that you want to have a market-driven demand for the local currency. It means that you have to be responsive to the market rather than reactive to situations.
“So, at every stage, we are consulting with the market, which is not extremely big by the way. So, you will find that all the measures that are in place are to ensure that we have a smooth transition to the Zimbabwean dollar.
“The best scenario is that everybody wakes up actually desirous to use the Zim-dollar without having been compelled by law, so to say. We will allow the market forces to determine,” he said.
Deputy Minister Mnangagwa said there has been some stability, both in the currency exchange rate and prices.
“This is due to the policies that are in place which we endeavour to sustain as Treasury just to ensure that we do not have spikes in your exchange rate which also fuels inflation.”