HARARE – Movement for Democratic Change leader Nelson Chamisa accused the government of passing “ambush currency measures” on Monday after the government called time on a 10-year multi-currency regime and announced the return of the Zimbabwe dollar as the sole legal tender.
Finance Minister Mthuli Ncube said the measure, announced in a surprise government gazette, was taken to stop the market from dollarising.
But Chamisa says the new measures will only end in grief without public confidence in a Zimbabwean currency.
“Guerilla economics and ambush currency measures are ill-advised, destructive and confidence draining,” Chamisa said on Twitter.
He added: “Zim-dollarisation requires that macroeconomic fundamentals, public confidence, trust, fiscal discipline, political stability and legitimacy be in place for it to be fully sustainable.”
Chamisa’s deputy Welshman Ncube said in another tweet: “For much of today, I have had the feeling of having woken up to country taken over by escapees from an asylum.”
Finance Minister Ncube maintained he had to act after teachers’ unions told him that their members were no longer able to access goods and services because companies were demanding payment in United States dollars.
“What was happening in the market is that the market was self US-dollarising, it was uncontrollable, and we felt that we needed to bring the situation under control,” Ncube said.
“I met the teachers’ unions and they made it very clear to us that the multi-currency regime had become a US dollar regime. They don’t earn US dollars, they can’t afford to buy things in shops, they can’t pay for medicines and health care services where the hospitals and clinics are demanding US dollars. Quite clearly, it became an untenable situation and it became necessary for government to move a lot faster to introduce a mono-currency regime with a domestic currency.”
Alex Magaisa, a former adviser to the late Prime Minister Morgan Tsvangirai, described the move to abolish the multi-currency regime as a “huge gamble”.
“The other question is how will the market react to the ambush? This is a huge gamble and it’s sink or swim for Zimbabwe. If the gamble doesn’t work and the Zimbabwe dollar suffers a similar fate to its predecessor, the consequences will be unimaginable. The government will have run out of options. This was one of the final cards. They have thrown it in. Let’s see how the market responds,” Magaisa wrote on his blog.
The central bank said that legal tender would only be the new “Zimbabwe dollar”, which would be made up of the two local currencies — bond notes and “RTGS” — that were introduced as US dollar banknotes dried up.
The US dollar, South African rand and other foreign currencies will “no longer be legal tender alongside the Zimbabwe dollar in any transactions,” the bank said in a statement.
“Bond notes and RTGS dollars are at par with the Zimbabwe dollar.”
Bond notes were introduced in 2014, while electronic RTGS (Real Time Gross Settlement) dollars came in earlier this year. Both were in theory worth the same as US dollars, but trade far below the greenback in value.
Monday’s announcement created widespread confusion and criticism, though Ncube described ending the use of foreign currencies as “beginning to restore full monetary policy”.
He told Zimbabweans to exchange their US dollars or rand into RTGS before buying any goods.
But Zimbabweans have little faith in the economic record of the Zanu PF government, which has struggled to attract investment and create jobs since President Emmerson Mnangagwa succeeded the ousted Robert Mugabe in 2017.