Quick Zimdollar Return Suicidal

THE Minister of Finance Tendai Biti has vowed that the Zimbabwe dollar will not come into circulation anytime soon unless the country’s economic performance can support it.

Speaking at the mining investment conference on Wednesday an emotional Biti, said it would be unscientific for someone to think of the return of the local currency in a manner which ignores the economic fundamentals prevailing in the country and region.

 

“Maybe I should commit suicide for some people to believe me when I say the Zimbabwe dollar is not coming back,” Biti said. “Let me repeat this for the umpteenth time; we cannot and are not going to return the Zimbabwe dollar, unless we have an economy which can support it.”

Biti said such an economy would among other things be characterised by exports that are about 30% of Gross Domestic Product as was the case in 1996 when the country earned up to US$5 billion in exports.

“When all major sectors of the economy start recording positive gains, then we will start talking about the Zimbabwe dollar,” he said.

Biti said the return of the Zimbabwe dollar should recognise trade pacts with countries organs such as Sadc, and Comesa.

“A narrow, parochial and nationalistic manner with regard to attempting to introduce the Zimbabwe dollar does not work,” Biti said.

Reserve Bank governor Gideon Gono last months said the country should prepare for the revival of the dead currency and link it to gold reserves held in the country, a move investors said was a journey into the past.

Gono said bringing back the Zimbabwe dollar would not be blind but a “guarded” process.

But analysts see an ulterior motive in bringing back the unit. They believe Gono could be oiling the printing press once again to finance and subsidise government departments and a coterie of government officials as he did in the past.

Harare-based economist John Robertson said: “If we try to bring the Zimdollar back, it will lose value in a week. You need credibility in your currency which is not there.”

Another economist Daniel Ndlela says: “People lost confidence in the financial system and if you talk of the Zimbabwean dollar what comes to people’s minds is whether they are going to sleep in queues again.”

Biti also said there was need to simplify taxes to lure investment. “The issue of taxation is more important than the indigenisation matrix.”

In mining alone, there are 15 different tax rates and a number of exemptions have cut the “effective” tax rate in that industry to 8% from 15%, he said. The top personal income tax rate is 47,5%,” he said.

Paul Nyakazeya