Until then, the country would maintain the multiple-currency regime, which is currently in place, as it has been the major contributor to the economic stability being experienced in the country. Biti said Zimbabwe was a small market with relatively weak demand, and there would be limited benefits if the country was to introduce its own currency.
Various views have been peddled on the course to take in as far as the currency system in this country is concerned.
Some economists say Zimbabwe should reintroduce a local currency that is linked to the South African rand through the Common Monetary Area, which links South Africa, Lesotho, Swaziland and Namibia. This means that Zimbabwe would revert to its own local currency but the exchange rate would be at par with the rand.
This system would make it easier to shift to the Sadc single currency, they said. Another option would be for Zimbabwe to push for full dollarisation where the United States dollar is adopted as the currency of the nation.
However, economists argue that because Zimbabwe’s economy is remotely linked to the US economy, dollarisation might not be the best option. The US dollar is the commonly used currency. Others such as Reserve bank of Zimbabwe chief Gideon Gono want a gold standard backed currency.
The gold standard is a currency system in which the standard economic unit of account is a fixed weight of gold. There have also been calls for the use of the Chinese Yuan amid arguments that Zimbabwe’s economic recovery was at the mercy of the US dollar, which was facing threats from the global financial crisis.
Biti said that if the ratio of exports to imports changed to 5:1 from the current 1:3, the country would be ready to have its own currency. Last year Zimbabwe had a trade deficit of US$5 billion from imports of US$8 billion and exports of about US$3 billion. Biti said treasury would continue with cash budgeting but also noted that there was an over-reliance on the budget, with Zimbabweans largely overtaxed. He said this was reflected in the revenue to GDP percentage which was at 30% against the average of small economies of 16%.
Biti said Zimbabwe had survived without direct donor assistance to the budget and could do even better if foreign direct investments improved.
The country hopes to maintain the above average growth rates, which is underpinned by firm commodity prices on minerals and tobacco.