Zimbabwe’s dollar may return

Bank notes being counted with the Zimbabwean Dollar, left, made up of various denominations and the South African Rand, right, in Harare, Zimbabwe, on Thursday, April 23, 2009. The South African rand is the ÒreferenceÓ currency being used in Zimbabwe, and is the most popular in circulation together with the U.S. dollar, the Economic Planning Minister Elton Mangoma told reporters in Pretoria. Photographer: Kate Holt/ Bloomberg News

Bank notes being counted with the Zimbabwean Dollar, left, made up of various denominations and the South African Rand, right, in Harare, Zimbabwe, on Thursday, April 23, 2009. The South African rand is the ÒreferenceÓ currency being used in Zimbabwe, and is the most popular in circulation together with the U.S. dollar, the Economic Planning Minister Elton Mangoma told reporters in Pretoria. Photographer: Kate Holt/ Bloomberg News

Published Apr 24, 2014

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Harare - Zimbabwe was weighing the reintroduction of the national currency it abandoned in 2009 as it struggled to meet its monthly wage bill, three members of the ruling party’s decision-making body have said.

Zimbabweans use US dollars and the rand, as well as the pound and Botswana’s pula.

While the revival of the Zimbabwe dollar would allow the government to print money to meet its needs, it could damage the popularity of President Robert Mugabe’s Zanu-PF, said the people, who asked not to be identified because the discussions were private.

Finance Minister Patrick Chinamasa did not answer calls made to his cellphone.

However, he told reporters in Harare on Tuesday that the government would alter its plan to force all foreign-owned companies to sell or cede 51 percent of their assets to black Zimbabweans.

The government would now impose local ownership rules that would differ “sector by sector”, Chinamasa said.

Companies including Impala Platinums and Anglo American Platinum have ceded stakes in their Zimbabwean assets to locals.

In 2009 the country abolished the Zimbabwean dollar after the inflation rate surged to 500 billion percent the year earlier, according to International Monetary Fund (IMF) estimates, and the party lost its parliamentary majority in elections while retaining the presidency.

Last year Mugabe won re-election and Zanu-PF defeated the Movement for Democratic Change to regain control of parliament and end a four-year coalition government.

The party insiders said Zanu-PF’s politburo was trying to decide whether it would do more harm to its image by reintroducing the currency and meeting its wage commitments or continuing to use foreign exchange, protecting the country’s citizens against inflation.

A majority of politburo members were against its reintroduction, they said.

Between 2000 and 2008 the economy contracted by 40 percent, according to the IMF, and millions of Zimbabweans emigrated.

The economy has expanded every year since the use of certain other currencies was permitted.

“We’ll just die. We can’t go back to 2008,” Jehosephat Dambadza, a furniture maker in Harare, said. “If they bring back the dollar it will quickly deteriorate to worse than then. We’ll have nothing.”

This year the economy has slowed, with sales of consumer goods falling as much as 30 percent in February and revenue collection declining by 10 percent, according to the Treasury. Consumer prices fell for a second month in March.

Wages accounted for 58 percent of government expenditure in February. Zimbabwe has about 285 000 government workers, including soldiers and police. Pay increases agreed to by the government earlier this year have been delayed.

“It’s physically possible to reintroduce the currency,” Christie Viljoen, an economist at NKC Independent Economists in Paarl, said. “They could force civil servants to take the Zimbabwe dollar as payment and they could force banks to stock them.”

He added: “Zimbabwe has big economic problems. They have a huge current account deficit and a fiscal shortfall. They need money from somewhere and they’re running out of options.

“Reintroducing the Zimbabwe dollar could be an option.” – Bloomberg

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