President Emmerson Mnangagwa said the decision to ban foreign currencies and bring back the Zimbabwe dollar brought the country back to normalcy.
Zimbabwe has been using US dollars since 2009 when the old Zimbabwe dollar was rendered worthless by hyperinflation as the economy collapsed.
Critics have argued it was premature to reintroduce the Zimbabwe dollar since the fundamentals are not in place but Mnangagwa disagreed saying
“What is critical is . . . ukavona tofamba zvinenge zvagadzirika.”
Mnangagwa was speaking on the sidelines of the AU-UN Wildlife Economy Summit in Victoria Falls on Tuesday, 25 June 2019
Zimbabwe has gone back to normalcy; the normalcy is the country must have its own currency. We Zhave been living in an abnormal situation.
He added that US dollar pricing was hurting the majority who were earning their salaries in the RTGS Dollar now renamed Zimbabwe dollar.
“Stable and affordable prices for those with access to dollars, while the majority face an unrealistically high cost of living. This is unfair and unsustainable,”
There are fears that the government will raid peoples foreign currency accounts (nostro) as they did 10 years ago but the president reassured the public saying;
Those holding Nostro (forex) accounts will still have access to those accounts in the currency they held.
Mnangagwa urged Zimbabweans not to be fearful of the Zimbabwe dollar saying
We cannot be fearful of change, but must boldly embrace it as we move forward. The conditions are in place for Zimbabwe to have its own currency
Will the new currency drastically devalue as many critics expect or will it stabilise? Only time will tell!
Mnangagwa released a press statement on social media on the return of the Zimbabwe dollar saying
It has always been clear that for our economy to truly take off, we need our own currency. While the multicurrency regime helped to stabilise the economy, it did not give us control of monetary policy and left us at the mercy of US Dollar pricing which has been a root cause of inflation.
When the majority earn in the local currency, but goods are priced in US dollars, the outcome will only ever be a two tiered economy:
Stable and affordable prices for those with access to dollars, while the majority face an unrealistically high cost of living. This is unfair and unsustainable.
Before we could have our own currency, it was however important that key fundamentals were first put in place.
Central to this was regaining control of our budget, through decreased spending, increased revenues and, for the first time in recent memory, budget surpluses. Under the careful guidance of Professor Ncube, this has been achieved.
As a result, yesterday we passed a Statutory Instrument to abolish the use of multiple currencies, and make the Zimbabwe dollar the sole legal tender with immediate effect. This is a key component of our transitional stabilisation programme, and an important step in restoring normalcy to our economy.
Government and the RBZ are taking the necessary steps to ensure this move is a success, through increasing the flow of forex into the interbank market while also making forex available to individuals and small businesses through bureau de changes.
On a day to day basis, this will change very little. People will still be paid in RTGS dollar and bond notes, and goods and services will be priced in the same currency.
Those holding Nostro accounts will still have access to those accounts in the currency they held.
The only way forward is to reform so that we build a country in which all have the opportunity to prosper.
We cannot be fearful of change, but must boldly embrace it as we move forward. The conditions are in place for Zimbabwe to have its own currency. Let us all work together, as one people, to make it a success.