The Zimbabwean government has stated that it will announce a clear and transparent plan to move away from using the United States (US) dollar in order to prevent any negative impacts on the economy and to avoid further hardships for its citizens.
Originally, the country was planning to end the use of the US dollar and other foreign currencies in 2025, as they currently coexist with the local currency. However, President Emmerson Mnangagwa has extended the deadline to 2030.
In 2019, the government reintroduced the local currency after a ten-year period of using the US dollar. However, the local currency has struggled to maintain its value. As a result, some businesses have started pricing their goods and services exclusively in US dollars to protect themselves from potential losses. Additionally, banks have stopped lending in US dollars to prevent financial losses.
Deputy Finance Minister Kudakwashe David Mnangagwa informed lawmakers that the government is engaging in extensive consultations with stakeholders and will keep the markets informed about the de-dollarisation strategy. He said:
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 in place. This is part of the de-dollarisation programme.
After thorough consultations with all stakeholders, the market 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.
Mnangagwa, who is the son of the President of Zimbabwe, stated that the transition to a single currency will happen gradually and will not be sudden or abrupt. He mentioned that there has been some stability in the currency exchange rate and prices, thanks to the policies in place by the Treasury. These policies aim to sustain stability and prevent sudden increases in the exchange rate that can lead to inflation.
However, Mnangagwa acknowledged that the local currency, the Zimbabwe (Zim) dollar, is vulnerable to attacks from economic predators. He mentioned that during the bonus season, there may be individuals who try to take advantage of civil servants’ salaries.
Zimbabwe switched to using the US dollar in 2009 after the collapse of the local currency during a period of hyperinflation. Attempts to return to using the Zim dollar exclusively have caused market concerns and affected exchange rate stability.
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