‘De-dollarisation is a process’- Mangudya

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THE Reserve Bank of Zimbabwe Governor, Dr John Mangudya says de-dollarisation is a process hence some firms are charging in foreign currency as a way of mopping forex in the informal economy.

Dr Mangudya said this at the establishment of the currency stabilisation task force in Harare this Tuesday.

Responding to questions from journalists regarding the inconsistencies within the economy where some companies are charging in foreign currency while others are charging in local currency, Dr Mangudya said there is nothing wrong with that as de-dollarisation is a process which can go beyond five years.

“De-dollarisation is a gradual movement from dollarisation. When we introduced the interbank rate on 22 February 2019, that was the beginning of the journey to de-dollarise. De-dollarisation is a process, not an event other countries take 10 to 15 years, for example, our neighbours Zambia took 5-6 years and Democratic Republic of the Congo (DRC) they are still on at the moment,” said Dr Mangudya.

He explained that when the economy de-dollarised, some firms and individuals were receiving foreign currency and it cannot be stopped abruptly but gradually.

“When we talk about de-dollarisation, it does not mean everything else stops. We need to look at the benefits of dollarisation and de-dollarisation. We have gold producers who are paid 50 percent in forex and 50 percent in local currency, how do you expect them to use their foreign currency? What we have not done is give timelines on what we did on day 1 day 2 day 3 day 4 for everyone to see the process,” he said.

Since the introduction of de-dollarisation, the government has allowed tourism players to charge in foreign currency for visitors while oil companies with free funds have been allowed to import fuel and sell it in foreign currency.

“There is no inconsistency in that regard, some companies are trading in foreign currency, some are being taxed in foreign currency, it is a process. What is left is having timelines. We are all aware that 60 percent of the economy is informal and 40 percent is formal and there is too much money in the informal economy. So, this is a way of taking foreign currency to the formal economy when they buy fuel in foreign currency,” explained Mangudya.

The government de-dollarised the economy in June last year by reintroducing local currency bank accounts, which are trading in electronic transfers and bond notes only.

The reintroduction of the RTGS dollar, now known simply as the “Zimbabwe dollar”, means that all foreign currency is not legal tender.