Home » General » USE OF MULTIPLE CURRENCIES HERE TO STAY, SAYS ZIMBABWE’S FINANCE MINISTER

HARARE, July 28 — Zimbabwe’s Finance Minister, Patrick Chinamasa, says the use of multiple foreign currencies is here to stay as he put paid to speculation that the government wants to re-introduce the local currency, the Zimbabwe dollar.

The speculation was based on Chinamasa’s statement in Parliament last week that dumping of the Zimbabwe dollar and adoption of the basket of multiple foreign currencies in 2009 had driven up cost structures in the economy which was contributing to current economic challenges.

The challenges include failure by the government and companies to mobilise capital to fund their budgets and pay salaries, continuous demands for upward salary reviews, increases in prices of basic commodities and declining consumer spending power.

In a re-assurance to the nation and investors for the umpteenth time, Chinamasa said without giving any time-frames that use of the multi-currencies which include primarily the United States dollar and
the South African Rand would continue.

“Government is committed to ensuring policy consistency and predictability in order to restore and stimulate economic activity,” he said in a statement. “It is in that spirit that Government would want to reiterate that the multi-currency system is here to stay.”

Chinamasa said Zimbabwe was not yet ready for re-introduction of the local currency, given the current state of the economy where industry was struggling and the balance of payment was in the negative.

An absence of fresh capital and foreign direct investment has hit the economy hard, however. While use of the multiple foreign currencies has its own challenges such as restricting the role of the Reserve Bank, liquidity challenges, high cost of borrowing, Chinamasa said the benefits of the system more than outweigh the costs.

Under present conditions, Chinamasa said, the local currency if re-introduced “would fail to perform its basic functions as a medium of exchange and store of value”.

SOURCE: NEW ZIANA

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