Govt allays demonitised Zim dollar return fears

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FINANCE Minister Patrick Chinamasa moved to allay fears of the return of the demonetised Zimbabwe dollar yesterday while announcing the delayed midyear fiscal policy review.

Fears of the return of the defunct local currency had heightened since the May announcement of the introduction of bond notes from next month as an export incentive scheme supported by the counter-cyclical facility from AfreximBank.

However, Chinamasa dispelled the fears, saying the multicurrency regime was “here to stay”.

“I, therefore, also want to further allay fears and concerns of re-introduction of the Zimbabwe dollar through ‘the back door,” he said.

“Government has instituted a number of export incentives, including the bond notes scheme supported by the counter-cyclical facility from the AfreximBank. This is being complemented by measures on ensuring efficient utilisation of foreign currency.”

Chinamasa said efforts should be directed at building reserves in the different foreign exchange reserve multi-currencies, that way also militating against risks associated with using one currency.

“As I have on many occasions previously reiterated, and as has also been stated by the Governor of the Reserve Bank (John Mangudya), the economy is not yet ready to adopt its own currency, and will remain with the multiple currency regime, until such a time when our economic fundamentals are capable of supporting a local currency,” he said.

The treasury chief said this in view of difficulties, on the part of traders, in accessing other currencies owing to heavy reliance on the US dollar.

Government has, according to Chinamasa, agreed to take steps to move away from sole reliance on the US dollar and encourage the use of other currencies such as the euro and the rand.

“Promoting increased use of the euro and the rand will also boost investment and trade relationships between Zimbabwe and the European Union and South Africa, which both present huge markets for our various agricultural commodities,” he said.

The treasury boss said it was fundamental to appreciate the inter linkages, under a multi-currency system, between liquidity and external inflows into the banking system through production for export, diaspora remittances, foreign direct investment and portfolio investments, as well as foreign lines of credit.

In order to enhance the use of electronic payments, Chinamasa proposed to suspend customs duty on point of sale (POS) machines to reduce the cost of installation and enhance efficiency in business transactions.

“This is contributing towards improved financial inclusion and convenience to the low-income households and micro enterprises that are, thus, able to access financial services that were previously beyond their reach,” said Chinamasa.-Fidelity Mhlanga

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