RBZ to promote use of Zim dollar

PHILLIMON MHLANGA

The Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya, on Thursday said the central bank will introduce measures to incentivise the use of the Zimbabwe dollar to reduce demand for foreign currency for domestic transactions.

Apparently, Mangudya, who spoke at the CEO Africa Roundtable meeting held in the capital,  said although trust in the domestic currency was low, going  back to dollarisation was not feasible. He said the move would cripple the country’s competitiveness.

“”We are going to put in place  measures to promote  the use of the local  currency to reduce  demand for foreign exchange  for domestic  transactions,” Mangudya said.

But, economist Tony Hawkins, who also spoke at the CEOs meeting  said Mangudya was trying to promote the Zimbabwe dollar that nobody  want to use as it continues to lose ground against the United States dollar.

“In 2018/2019 Mangudya promised to preserve value of the Zimbabwe dollar. But, since then prices have gone up 3 000% and the currency’s value has devalued by 99%,” Hawkins said.

He added: “He (Mangudya) talks about people using local currency but if you go to my bank, the hole in the wall (ATM machine) tells you can draw 2 000 bonds (Zimbabwe dollars) which are now worth US$0,88.”

Hawkins said government was dishonest  to call for the use of the local currency yet paying civil servants bonuses in United States dollars.

Government is also charging some of its taxes in foreign currency as well as asking for US dollar payments for passports.

“It is the inconsistency, the contradiction, the deceit, the dishonesty of the government. If they do not believe their own untruths, why should we believe in it,” Hawkins  said.

Zimbabwe’s annual inflation stood at 60% in January, from 837% in July 2020.

However, Mangudya has projected that inflation would end this year at  between 20% and 30%.

Mangudya said: “Monetary conditions  are expected to remain  restrictive to  deal with inflation.”

However, Hawkins said although this was a huge decline,  60% was still one of the highest inflation rates  in the world.

He also said the 7.8%  economic growth government said the economy achieved last year was an exaggeration.

He said the economy could have grown by about 6%.

This year, Hawkins, project the economy to grow by  between 3% and 4%.  On the other hand, government is projecting the economy to grow by 5% this year.