Ex-Minister pushes for local currency

HARARE – Former deputy Finance minister Terence Mukupe, said without reintroducing local currency and having a serious reengagement with the United States of America (USA) the country will continue to suffer.

Posting on his Twitter account, Mukupe said the authorities must make bold decisions to take the country out of this crisis.

“With the twin deficit we have…. Our situation is beyond policy pronouncements… Let’s be bold and seriously pursue reintroduction of our own currency backed by currency swap deals with SA and China as well serious and sincere reengagement with America otherwise mmmm hameno.”

The sentiments come as economists have called for the bond notes to be demonetised in favour of hard currency borrowed abroad.

Government abandoned the Zimbabwe dollar in 2009 after the currency had been rendered worthless by hyperinflation.

Government is adamant that the bond note  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.

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.