Zimbabwe’s government has ruled out adopting the United States (US) dollar as its default legal tender again, saying it won’t repeat its past mistake of abandoning the local currency.
The permanent secretary in the Ministry of Finance and Economic Development, George Guvamatanga told business leaders Monday in the capital, Harare that removing the local currency was the country’s biggest mistake. He said:
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One of the biggest mistakes was dollarizing and removing your own currency.
We will build this economy on the basis of the Zimbabwe dollar. The local currency will anchor this budget.
He made the remarks after the former Finance Minister (GNU era), Tendai Biti, recently called upon the government to redollarise since businesses were accepting the currency as legal tender.
Guvamatanga also speaks after Finance Minister, Professor Mthuli Ncube, last week presented a budget that targets spending of ZWL$421.6 billion (US$5.2 billion) next year, with a deficit of ZWL$4.9 billion.
Zimbabwe reintroduced its own currency last year after was scrapped in 2009 following a record-high 231 million percent hyperinflation.
Since 2009, the Southern African country has been using a multicurrency system which saw the South African Rand, Botswana Pula, Chinese Yuan, British Pound and the United States dollar being the major currencies in the system.
In June this year, the Reserve Bank of Zimbabwe (RBZ) introduced a foreign-exchange auction trading system, abandoning a peg of 25 to the U.S. dollar that was introduced three months before, in an endeavour to curb the runaway inflation.
Authorities credit the auction system for the stabilisation of the exchange rate which has since September been hovering about 80 Zimbabwean dollars for every U.S. dollar.
While Biti is of the view that the auction system will collapse, RBZ Governor John Mangudya earlier this month said price growth could ease to nine (9) percent by the end of 2021 due to exchange-rate stabilization measures adopted by the central bank.
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