By Bruce Chahwanda
THE Reserve Bank of Zimbabwe together with the Ministry of Finance and Economic Development is working on a five-year de-dollarisation framework.
RBZ Governor, Dr John Mangudya revealed this at a state of the economy report for the first quarter in Harare this Friday.
“As RBZ and government, we are coming up with a de-dollarisation framework which will be over five years. The de-dollarisation journey has just started which we think will take five years,” he said.
Dr Mangudya indicated that what is happening in the economy is not peculiar as other countries have different levels of dollarisation and de-dollarisation does not mean the country is throwing away the use of foreign currency.
“Most countries in the world they have a level of dollarisation, Liberia is at 70%, Zambia 45%, Zimbabwe is at 32%, Uganda at 32%, Tanzania 30 %, Mozambique 28%, Botswana 15 % and Kenya 13%. The argument is how can we motivate people to utilise local currency not saying how do we throw away the USD,” he said.
The stabilisation of the exchange rate will also impact positively on inflation figures.
“We want an inflation pattern which is stable. RBZ projects month on month inflation to end the first quarter of 2020 in single digits and end period annual inflation at 50 percent,” he said.
In a bid to ensure there is stability in the economy, the Reserve Bank of Zimbabwe has come up with a number of measures.
“Way forward to stabilise prices and exchange rate include a sound fiscal position to limit monetisation of fiscal deficit, commitment to monetary targetting framework to contain money supply growth, issuing attractive money market instruments to enhance the store of value function of the local currency, promoting the use of free funds through formal means to make sure that we use that USD 1 billion which comes through remittances.
We are trying to put value on people’s money, it is all about value preservation and give reaffirmation that money is not being printed in Zimbabwe. Empowering bureaux de change to complement banks in transparency trading of foreign currency and promoting productive sector lending through appropriate incentives to banks,” said Dr Mangudya.
Government introduced the Reuters system as a way of stabilising the exchange rate. Dr Mangudya said the Reuters system means nothing except that its a platform for trading which is efficient and promotes transparency.
By Bruce Chahwanda