Is Zim dollar on way back?

HARARE - There are renewed fears that the government may be considering re-introducing the discarded and much-derided Zimbabwe dollar after Finance and Economic Development minister Patrick Chinamasa said on Monday that the introduction of the multi-currency regime in 2009 was to blame for the economic challenges Zimbabwe is facing.

Giving evidence on the state of the economy before the portfolio committee on Finance and Economic Development in Parliament, Chinamasa said the introduction of the multi-currency regime had caused an increase in the cost of goods and services, while raising salaries to unsustainable levels and reducing demand at the same time.

“The migration from hyperinflation to multi-currency did a lot of damage to our economy. It pitched our cost structure too high and unsustainably.

“It’s like we devalued the US dollar, where in America a dollar can purchase four cokes, in our case it can only purchase two or one in some cases depending on whether it’s canned or not or where you are buying it from.

“So, in that sense it means that the cost structure is not sustainable, it basically kills aggregate demand which is very necessary for any economy to function.

“Secondly, the wage structure that the private sector is paying is also not sustainable. We are beginning to see the signs now.

“A lot of companies are six, seven, eight months behind, without paying wages,” he said.

Surprisingly, it was Chinamasa, then acting Finance minister, who introduced the multi-currency regime on January 29, 2009, in the wake of the spectacular and calamitous collapse of the Zimbabwe dollar at the time.

The feverish market speculation that followed Chinamasa’s comments on Monday mirrors that which hit the country late last year when the Reserve Bank of Zimbabwe printing company, Fidelity Printers, was reported to have recalled all its contract workers back to work, at a time there did not appear to be any compelling reason for this.

But both Chinamasa and the central bank quashed the speculation then, with Fidelity Printers saying it had not yet been instructed to print the Zimbabwean dollar.

“From time to time when the need has arisen, the company has over the years relied on contract staff, including former employees and will continue to do so,” said Terence Machawira, Fidelity’s legal counsel, in written responses to the Daily News.

“As a high security printing company, we remain prepared and continue to seek currency printing business both locally and globally,” he added.

Former Finance minister Tendai Biti had also said around the time that the Zanu PF government would be forced to reintroduce the shelved Zimbabwe dollar in 2014 to avert total economic collapse.

“The sad truth of the matter is that the Zimbabwean dollar will be back. It is not a matter of if, but when,” the then MDC shadow Finance minister told a press briefing at the party’s Harvest House headquarters in central Harare.

Biti said government revenues had collapsed and the State could not meet its wage bill and other pressing obligations.

“The government has been borrowing to pay the wage bill, in the process committing the cardinal sin that you do not borrow for consumption or recurrent expenditure,” Biti said.

Tony Hawkins, the head of the University of Zimbabwe’s Graduate School of Management, also said at the time that the tightening liquidity in the economy could force a government rethink on the possible re-introduction of the Zimbabwe dollar, adding that there was also always the risk that politicians would seek a “superficial” way out to finance Zanu PF’s 2013 campaign promises.

“I suspect — perhaps fear — that the government will opt for some dual currency option,” said Hawkins in a recent presentation of the 2014 economic outlook.

While economists canvassed by the Daily News yesterday agreed with Chinamasa’s diagnoses of the problems afflicting the economy, they warned against the premature and political re-introduction of the Zimbabwe dollar.

Christopher Mugaga, an independent economist, said the re-introduction of the discarded currency would spell doom and gloom for the ailing economy.

“The economic fundamentals are currently more misaligned than they were in 2008 and government is best advised to continue using the multi-currency system as a way of maintaining stability,” he said.

Comments (29)

How can a “qualified” Finance Minister introduce the Zimdollar that was being discarded at dustbins and was being used as toilet paper? Where is the logic Comrade Minister?

Kudyazvemarema - 23 July 2014

Yes my very point exactly. the Minister, and government should stop focusing on which currencey is on the market whether ZAR, USD or Z$ coz any of them can be erroded by the wrongs in the economy. Focus must be more on pillars that build value in an economy. I rank them as follws. No.1. Corruption-The minister should do well to reign that -knowing well where to search and control. No.2. Liquidity-The minister should make sure every single penny in Zimbabwe circulates in the formal mainstream-so must arrest mischief by Non-bankind Asians + SADC speculators who are bussy syphoning money out.No.3. productivity.The minister should establish whether there is any GDP from productivity not floating recurrent expenditure in criticasl sectors like Agriculture, mining, industry e.t.c. Would the minister want to audit New farmer productivity? Would he like to review mining accountability? Is there tax payments from these sectors or its free mandela in the name of indeginisation? No.4. The government (central and local)would do well running own money making projects and stop over-relying on tax whereat the atx base is dwindling by day. No.5. Review tax laws and tax the farms, rich, falmboyent.....let everyone pay for each dollar earned on Zimbabwean soil whether by hook or crook-infact the crooks pay double tax! Crafting solutions is less of a challenge than fighting opposing forces-the minister's job is not an individual assignment. Everyone has a stake in this.Everyone must play their part rather than wait for one man to change water into wine.That happened once in Cana, and the Lebanees from ancient Phonecia will not be amused to learn there is a Jesus incanate 'playing first' miracle somewhere in Southern Africa

Fairtalk - 23 July 2014

The best thing ZANU PF can do for our economy is to step down gracefully.There is more to winning an election than just sitting in lofty offices working on corrupt deals.

KUROVAIMBWA PACHENA. - 23 July 2014

I wouldd a 6th to Kurovaimbwa 'list of 5: Reduce the public wage bill by removing ghosts from the payroll. Why pay a ghost?

Johno - 23 July 2014

Fairtalk wakadziya, you deserve a place in our economic ministry your points are very valid

Syboks - 23 July 2014

Who destroyed our economy to the pvoint that we can not have our own currency Mr minister .

Diibulaanyika - 23 July 2014

Ndakambopfuura nepaidzidziswa zveconcept inonzi agenda setting kuPolicy Making. Iyi iri kuitwa naVaChinamasa inonzi Agenda Setting. They want to bring back the Zim dollar and are in the process of setting the agenda in the public domain. Advice is those who know they will be negatively affected by this shld start acting accordingly, e.g. withdrawing money from the bank woisa pasi pe pillow!

mai2 - 23 July 2014

The country has already changed from the Zim Dollar, now the US Dollar is not working . We cannot go back to the Zim Dollar. I suggest we change a different thing this time - the government. We have been tinkering around the edges. It's time to change government. Surely, the problem cannot be the US Dollar which is working well in the US. It can only be one thing and one thing only - the inept government. This hasn't been changed for some time. It certainly is not the Zim Dollar or the US Dollar which is the problem - it's the government. I have just had a light-bulb moment. The moment Mugabe addresses the nation that he is stepping down the economy will start to recover which seems remote given his lust for power.

Musona - 23 July 2014

the number of civil servants mainly army and police is too big for a small country like Zimbabwe,they must be a massive retrenchment,there is no war in Zim, no civil war ,the other issue is corruption,they only talk about it and no measures are taken.

chigutiro - 23 July 2014

Ngatiti tiri mu bhazi se ma passengers mumwe wedu osimuka oti vanhu we mutyairi uyu haasikuziva kutyaira ndino mukunda ngaabve ndityaire bhazi tikurumidze kusvika pasina tsawona. Hoyo odzinga mutyairi oti iye ndini ndave kutyaira bhazi iroro. Isu vamwe ma passengers toti zvakanaka tyaira tiwone zvawataura asi iwe woti wagara pano gara mutyairi wave kubvunza isu vamwe ma passengers kuti ko ma brakes ndeapi, switch yema wipers ndeyipi, fuel gauge ndeyipi, ko to tsaukira kurudyi here kana kutu kuruboshwe, indicator switch ndeipi? To pedzisira tave kurovera pamuti. Zvino ndochiyi ichocho? Unodzinga mutyairi angaachiita basa zvakanaka. Ibva hauna zvaunoziva. (We are travelling on a bus and one of the passengers stands up and complains about that the bus driver is driving too slowly and he can drive much better and safely and then tells the driver to stop and pushes the driver off the bus. He then sits down to drive but has to ask the other passengers which one is the brake pedal, which one is the wiper switch, which is the fuel gauge, whether he should turn left or right at the next intersection and where the indicator switch is? He starts the bus and goes crashing into a tree on the side of the road. We are well and truly stuck. Why on earth did he insist on driving when he hardly knows where the brake pedal is?) Mugabe is the man who has crashed the bus.

Musona - 23 July 2014

Where can you buy 4 cokes with a dollar. Do not lie to us

Jay - 24 July 2014

Please Mr. President,do us a favour & just go peacefully.Do you really want to take Zimbabwe to your grave??? Thank God for your past 34 years in power.When are you going to realize that 'enough is enough?' And, which fool can still believe your creation of false hope??

garandichauya - 24 July 2014

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CHIREMBA - 24 July 2014

musona wandiuraya nekuseka. Panyaya yakoshamwari driver ndiani? Konyakudzinga driver iye asingagoni kutyaira ndiyani iyeye? Ko mubus rakoiri hamuna here vamwe vanogona kutyaira? Ko iyemi vakuru vangu hamugoniwo here? However, your story made my day.

taurai - 24 July 2014

Musona is just the right top commentator! Sometimes when I want to express myself, I find Musona has already stolen my ideas. I'll sue Musona for $20million dollars for theft! You made my day.

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GALLERYCARTRIDGES - 24 July 2014

moyowe.. iro zim dollar ringatiunzira zvitsvene here.. pakangooma apa.

mimi - 24 July 2014

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eee - 24 July 2014

“It's like we devalued the US dollar, where in America a dollar can purchase four cokes, in our case it can only purchase two or one in some cases depending on whether it's canned or not or where you are buying it from. its true 1 usd in Amarica is not a dollar in zimbabwe.

madzibaba - 24 July 2014

I am totally baffled by Chinamasa about his raving and ranting about the multi -currency system which he played part in introducing way back in 2009. To me he is like that carpenter who blames his tools for not doing a proper job. what they call in vernecular ''Kuhwanda nemunwe'' or ''ukuchatsha ngomunwe. My other advice will for these guys to copy the Zambian model of which I did witness and used way back in 1997 to 1999 and I still think they have it now. They used the US$ in conjunction with the kwacha (which was also worthiless like what happened to our Zim$. Each item will have two prices one in US$ and the equivalent kwacha cost. So it all dependent on what currency one wanted to use. The other things is our costing structure should change drastically this includes the salaries. Why are we paying these high salaries that are not in tandem with what is happening the world over? it is all about greediness and this ego thing that Zimbos have of being able to out do others. Simply example is Cuthbert Dube paying himself $500 000 a month. Imagine in USA the president earns about $400 000 in a year. Who approved Cuthbert Dube's salaries and why are steps being taken for him to pay back the money he overpaid himself? It really baffles and leaves us with a lot of questions than answers. It shows that Zimbos are just bieng taken for a ride. There are plenty ways available for us to address the economic downfall but these guys are not willing to adopt or implement them. Why? nobody knows

Gwenaz - 24 July 2014

On that Zambian model Which I wrote about in my earlier post I think Zimbos should be prepared to carry sacks of Zim Dollar but what can we do when our leaders seem to be clueless. But on another point even if we adopt the Zambian model due to the Economics law of demand and supply the Zim dollar will not be able to fare well against other currencies. So Zimbos do not worry much about it coming back.

Gwenaz - 24 July 2014

It will be very interesting to see the exchange rate at which the zim dollar will be resurrected at.

BADZA - 24 July 2014

@Badza I think it will be very interesting and on top of that it will go a long way to show us where we stand and give us clues on the amount of work that we need to do to bring it back to life. I think it better to know how deep or huge the task is than to guess. Proper yardsticks are useful for proper decision making but these guys are bent on doing guess work which has caused a lot of goal post changing now and then which is not helping the Zimbos' confidence.

Gwenaz - 24 July 2014

Some are saying they will return the local currency when the economy stabilizes but let me warn you that the economy will not stabilize under the current circumstances. We have enough forex to support GDP of over US$100 billion. South Africa has forex reserves of $30 billion to $40 billion supporting GDP of over $350 billion. Our $10 billion or so in banks and informal sector should support GDP of over $100 billion if the same ratios are applied. Companies that survived under the ZW$ have now closed down and more are still going to close down. What destroyed our local currency was a system applied by the authorities and we are able to sustain our own currency if the system is changed.

Ayanda Nyanga - 24 July 2014

Mr Chinamasa just introduce zim dollar chinyararire muone rikasa shanda. American dollar rine mweya please dzosai zim dollar and make sure haasi mabearer chque chete. Kuna Mwari kudenga our hope is on God thru our currency, He is master of impossibility, God can make wonders with our dollar. Problem we are putting our hope in USA instead our Lord Jesus master of impossibilities

kenneth - 25 July 2014

Let change tomorrow i still got a couple of billion zim dollars so i can buiy those diamands,

jack - 25 July 2014

Imi ka imi!!! Nyaya iyi yakaoma. I salute you fellow Zimbabweans, makashinga, makakunda zvizhinji. Kwabviwa kwaa kure, kunoendwa pava pedyo. Keep up the spirit. A new Zimbabwe for peace, progress and prosperity for and not wolves in wolfs' clothing...

MutemaMunhu - 29 July 2014

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