Breaking News

Zimbabwe moving towards dollarisation - Economists

by Daily News
25 December 2018 | 15263 Views
Economists have warned government over the continued usage of bond notes as a medium of exchange saying the surrogate currency is at risk of facing rejection from the market.

Government is adamant that the bond note, introduced in 2016, should continue to trade at par with the United States dollar despite the fact that the unit has lost considerable value to the greenback on the parallel market.

As a result, a three-tier pricing system has emerged on the domestic market, with market players pegging their prices in US dollars, bond notes and the Real Time Gross Settlement (RTGS) to reflect rates that would be obtaining on the black market.

With the bond notes failing to hold ground on the black market, economists opine that the country is progressively moving towards unofficial dollarisation.

It won't be the first time though this has happened.

In 2009, the country abandoned the Zimbabwe dollar before officially dollarising after adopting the US dollar as the anchor currency in its basket of currencies.

Despite the clear and present danger facing the surrogate currency, fiscal authorities are maintaining that the RTGS, bond note and US dollar are at parity.

Finance minister Mthuli Ncube also argues that demonetising the bond note and RTGS balances would be a costly exercise that needs to be budgeted for at a time when Treasury is operating on a shoe-string budget.

This has further worsened distortions in the market, thus fuelling the currency black market.

It would, however, appear that the officials are fighting a lone battle.

Banks have been rolling out the Foreign Currency Accounts (FCA), and keeping RTGS and bond note balances in separate accounts — a clear indication that three units are not the same.

The Zimbabwe Revenue Authority is also demanding duty on imported cars in foreign currency, while at the same time compelling companies to pay tax in the currency they would have invoiced their clients.




Renowned currency expert Steve Hanke cautioned government this week, saying market forces are spontaneously re-dollarising which will lead to the dumping of the bond note and RTGS.

"The dynamics in Zimbabwe are clear. Zimbabweans know that bond notes and RTGSs are not worth a US dollar and that the government has robbed them. So, everyone wants to be paid in dollars and even the government wants to be paid in dollars.

"The economy is trying to spontaneously dollarise, as it did in 2008 and Zimbabweans want to rid themselves of bond notes and RTGSs," he said.

National Business Council of Zimbabwe president, Langton Mabhanga said re-dollarisation must be viewed as a sensitive process as it is causing excruciating pain on the populace.

He said Ncube must spell out the safety nets and explain the stealth dollarisation because there are no policies that are protecting even the poor and vulnerable.

"Government itself doesn't have forex and it is the biggest employer so the fiscal authority needs to protect the transacting public," he said.

Economist Carren Pindiriri said the bad money has the effect of chasing away good money, "so it's obvious that rational economic agents will not use US dollars where bond is an alternative and the market has already responded by the bond price and a US dollar price".

Economist John Robertson said there is need for government to fix sectors such as agriculture to increase exports as opposed to dealing with the symptoms.

"We will keep talking about corruption, teachers and doctors demanding US dollars because we have not done much to fix the real problems, which are deliberately being ignored," said Robertson.

This also comes at a time where the inflation rate has reached 31 percent, a huge leap from 20,85 percent reported by Zimbabwe National Statistics Agency previously.

Economists RTGS Mthuli Ncube

Source: Daily News

Comments

Latest News

Chamisa opens up on Monetary Policy Statement

by Mandla Ndlovu | 21 February 2019 | 5 Views

RBZ's interbank forex policy failed miserably in 2008 - Just in case f...

by Colls Ndlovu | 21 February 2019 | 1 Views

NetOne donates to ZRP

by Simbarashe Sithole | 21 February 2019 | 1 Views

ZANU PF only listens to violent rebellion! - The recent violent protes...

by Peace Chiwara Marangwanda | 21 February 2019 | 1 Views

Zhuwawo spills the beans on Mugabe,Chiwenga and Sekeramayi

by Mandla Ndlovu | 21 February 2019 | 1 Views

Mnangagwa's sincerity sways EU

by Mapozho Saruchera | 21 February 2019 | 1 Views

Robert Mugabe a hero and a true patriot

by Dr Masimba Mavaza | 21 February 2019 | 1 Views

'Dzamara has a fake degree'

by Mandla Ndlovu | 21 February 2019 | 6 Views

Two MDC officials released from military custody after heavy torture -...

by Mandla Ndlovu | 21 February 2019 | 4 Views

Chamisa accused of manipulating MDC structures

by Staff reporter | 21 February 2019 | 1 Views

Mangudya is a thief, he has devalued people's salaries

by Staff reporter | 21 February 2019 | 5 Views

Mnangagwa's Zanu-PF, govt ignore Mugabe - PRESIDENT Emmerson Mnangagwa...

by Staff reporter | 21 February 2019 | 1 Views

Chamisa to address Gweru 'Thank You' rally

by Staff reporter | 21 February 2019 | 1 Views

Dynamos race against time

by Staff reporter | 21 February 2019 | 1 Views

Lupane State University moves to ease students accommodation woes - LU...

by Staff reporter | 21 February 2019 | 2 Views

MSU student to lead continental body

by Staff reporter | 21 February 2019 | 2 Views

Chitungwiza mayor, deputy resign - Chitungwiza mayor Gift Tsverere and...

by Staff reporter | 21 February 2019 | 5 Views

No govt plans for Mugabe's 95th birthday

by Staff reporter | 21 February 2019 | 1 Views

Bulawayo has no title deeds to City Hall, Tower Block

by Staff reporter | 21 February 2019 | 1 Views

ZANU PF Youths celebrate Mugabe's birthday

by Mandla Ndlovu | 21 February 2019 | 5 Views

Mawarire, Mutasa dockets merged

by Staff reporter | 21 February 2019 | 1 Views

Zanu-PF knives out for Kazembe Kazembe

by Staff reporter | 21 February 2019 | 1 Views

Zimbabwe left with one week's supply of bread flour - ZIMBABWE is left...

by Staff reporter | 21 February 2019 | 1 Views

Nyarota's lawyer fined for negligence

by Staff reporter | 21 February 2019 | 1 Views

Sadc, EU positions on Zimbabwe: Attempting an end of history - Last we...

by Takura Zhangazha | 21 February 2019 | 1 Views

'Declare civil imprisonment unconstitutional' - A HARARE woman, who wa...

by Staff reporter | 21 February 2019 | 5 Views

'Political hand in Chitungwiza town deputy mayor trial' - FORMER Chitu...

by Staff reporter | 21 February 2019 | 1 Views

Mawarire wants treason charges tossed

by newzimbabwe | 21 February 2019 | 1 Views

Entertainment

TinTin suffers mental illness scare

by Mandla Ndlovu | 19 February 2019 | 3944 Views

Bulawayo artiste blasts Mnangagwa - BULAWAYO artiste Njabulo "SizFire"...

by Staff reporter | 18 February 2019 | 608 Views

Jabu features in nasty indecent tape - Studio 263 actor Jabu (real nam...

by Staff reporter | 18 February 2019 | 1316 Views

Omkhula lament lack of arts promoters in Zimbabwe

by Staff reporter | 17 February 2019 | 1000 Views

'Bulawayo artistes more popular outside Zimbabwe'

by Staff reporter | 17 February 2019 | 862 Views

Sex makes Zodwa Wabantu fat

by Staff reporter | 17 February 2019 | 3182 Views

HIFA 2019 cancelled

by Mandla Ndlovu | 15 February 2019 | 734 Views

WATCH: Jah Prayzah and Misred drop Kunerima video

by Mandla Ndlovu | 12 February 2019 | 5443 Views
iBlog

Greatsoftline For All Of Your Software Needs

coupon and promo codes: greatsoftline for all of your software needswhile some online sellers have promotional services that reduce the overall amount you spent, others do not .you need to be on the lookout for the best outlets in order to chase th... Read More
ITnews 25 February 2015 ago

Ios 9 Features Inspired By Android

apple announced ios 9 on monday, and while watching the keynote, i had just a little bit of déjà vu. most of ios 9's new features seem to be squarely aimed at apple's biggest rival in mobile: android. specifically, they were about catching up to ... Read More
Sergey 13 June 2015 ago