Finance and Economic Development Minister, Mthuli Ncube, on Thursday, insisted that the Government has put in place strong economic fundamentals to support the Zimbabwe dollar and full dollarisation is not an option.
Ncube said the Government is now focusing on ending arbitrage and speculative behaviour driving the depreciation of the local currency.
The local currency has shed considerable value in recent months both on the formal and informal markets and economic commentators and ordinary people have called for the dollarisation of the economy.
The Zimbabwe dollar is trading at ZWL$338: US$1, while on the parallel market it is going for anything between ZWL$500-ZWL$550 against the greenback.
Addressing a meeting on the currency crisis convened by the Political Actors Dialogue (POLAD) interlocutors in Harare on Thursday, Ncube blamed indiscipline within the market for the loss of value of the local currency. Said Ncube:
When you look at the fundamentals, they are strong in the sense of the deficit position, fiscal position and the monetary policy position, and when we consider the current account situation as well.
We should end the year again with a current account surplus with more inflows than outflows into the economy.
So, the fundamentals are strong; there is nothing wrong with the fundamentals.
It is really the arbitrage and speculative behaviour that we see in the market, and we have taken some measures to deal with that.
Ncube also ruled out full dollarisation, saying the country will continue the use of the dual currency system in line with the Government’s five-year de-dollarisation plan. He said:
We cannot just have the USD circulating because that will wipe out the balance sheets of companies. If you do that it will create a very dangerous situation.
You will also wipe out the pension balances so we do not want to go there, we have been there before.
Here we are trying to compensate citizens for losses (incurred when the country adopted the multi-currency regime) and people want to go back there.