Online Reporter
Nqobile Bhebhe
ZIMBABWE has entered the third and decisive stage of its de-dollarisation roadmap, which is focused on entrenching currency stability and building strong fundamentals for a domestic mono-currency by 2030.
Briefing journalists on the sidelines of the just-ended Zimbabwe Economic Development Conference (ZEDCON) in Bulawayo this week, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said the country has made significant strides since the launch of the roadmap nearly four years ago, culminating in the introduction of Zimbabwe Gold (ZiG), which has now anchored stability for the past year.
“You cannot de-dollarise if you do not have a domestic currency,” said Prof Ncube.
“So, the first step in our de-dollarisation roadmap, which started literally three years ago, if not four years ago, was to introduce a domestic currency, the Zimbabwe dollar, as you know, and then we struggled to stabilise it because certain fundamentals were not in place.”
He said authorities swiftly moved to tackle the key drivers of instability at the time, which included quasi-fiscal activities at the Reserve Bank of Zimbabwe (RBZ) and excessive liquidity growth.
“We, at that stage, we decided, look, let’s remove the sources of instability. So, we had the Treasury absorb some of the foreign loans that were sitting at the central bank, which were causing certain macroeconomic stresses. These are so-called quasi-fiscal activities.
“We also, as a fiscus, literally closed any borrowings from the Reserve Bank window, overdraft window, to make sure there is no excess growth in liquidity. So that was the first. The second step, introducing a domestic currency, and then removing the quasi-fiscal activities.”
Despite these measures, stabilisation of the Zimbabwe dollar remained elusive, leading to the introduction of Zimbabwe Gold (ZiG) last year.
Tinaye Agere