No Zim dollar return – Gono

HARARE - Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono says Zimbabwe is not ready yet to have its own currency.

Gono — who affirmed Finance minister Tendai Biti’s position on the reintroduction of the local currency — on Tuesday said the country had to first address its burgeoning trade-deficit.

The central bank chief said Zimbabwe remained heavily-dependent on the prevailing multi-currency system, dominated by the United States dollar.

“No, until such a time capacity utilisation has risen to levels that can sustain the value of the local dollar.”

This comes amid worries that a President Robert Mugabe-led government might “prematurely” revert to the Zimbabwe dollar, if the leader wins the looming election.

Last year, Mugabe’s Zanu PF party endorsed the return of the local currency  — dumped in 2009 after it was ravaged by a decade-long economic crisis marred with world record-breaking hyperinflation.

“The party would instruct government to work out modalities for the re-introduction of domestic currency alongside the multi-currency system in order to address the current liquidity crisis and to enable our people to carry out their transactions,” reads the Zanu PF resolution.

But Gono argues: “This country is not in any position to sustain itself currency wise. The levels of outflow in the country are worrisome,” adding that Zimbabwe’s imports still outweighed exports — a situation that would be detrimental to the local currency.

Recently, Biti said the slow recovery of the economy was delaying the re-introduction of the Zimbabwe dollar.

“Surely, you can’t return the Zimbabwe dollar when you don’t have the economy to sustain it,” he said.

“Your local currency is a relationship between your imports and exports and if you have this skewed deficit in your current account in your balance of payment position, in your capital account, you don’t have the economy to sustain a currency.”

According to figures released by Treasury, exports realised over the period January to December 2012 amounted to $3,8 billion, which compared unfavourably with imports of $7,6 billion.

John Robertson, a leading independent economist, concurred with Gono.

He said there were several issues that must be addressed before reverting to the local currency. “Our national debt is getting worse hovering over $10,7 billion and there are no indications that the trade deficit is being addressed,” he told businessdaily.

Robertson argued that the Zimbabwe dollar should only be restored at a time when the country is producing more than it is importing and “we are still a long way from getting there”.

The multi-currency regime is credited for stabilising the country’s economy, set to achieve growth for the fourth consecutive year.

However, the move has eroded the RBZ’s powers to intervene in the economy through monetary policy interventions, effectively confining its role only to regulation. -
Business Writers

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