The ailing Zimbabwean economy has refused to de-dollarise despite attempts by the government to reinstate the mono currency regime for domestic transactions, former finance minister, Tendai Biti, told Parliament Thursday.
In June last year, the government overnight banned the US dollar-anchored multi-currency regime directing that the local Zimbabwe dollar should be the sole legal tender for all local payments.
In March this year the government later made a u turn allowing the use of foreign currency, which the monetary authorities said was meant to cushion Zimbabweans from the effects of the Covid-19 pandemic.
Later in the year again the government gazetted a Statutory Instrument compelling businesses to adopt a dual pricing model, which meant a full return of the US dollar despite claims that the country was de-dollarising.
Speaking during a debate on the Finance Bill in the august House Thursday, Biti said the currency confusion was creating price distortions in the market.
“These distortions can easily be cured by accepting the reality, that is acknowledged in the RBZ (Reserve Bank of Zimbabwe)’s last month acknowledgement which is the fact that the economy refused to de-dollarise because conditions for de-dollarisation were not there,” said Biti.
“The economy has remained stuck in the USD mode. Madam Speaker, if you doubt what I am saying and you were to search all of us here, you would not find any of us with a single Zimbabwe dollar.”
He said the government’s exchange rate of US$1: ZWL$83 was blind to the fact that many people get foreign currency from the streets.
“If your aunt from the UK or South Africa sends you US$100, when you go into the shop to buy your goods you are buying at an official exchange rate of 1:83 but when you look for that USD, you are not buying it at 1:83 but at 1:110/115,” lamented Biti.
“We need to bite the bullet and recognise that the regime of multiple currencies has refused to go through the front door. I say through the front door because we are doing it through the back door. When the authorities pass a law to say there must be dual pricing in USD and in ZWL$ when you have not repealed Section 21, 22 and 23 of the Finance Act which this House passed as Finance Act No. 7 of 2019 on the 1st of August, 2019, that says the sole legal currency in Zimbabwe is now the ZWL$, then you are doing de-dollarisation through the back door.”
Biti said the government, by also demanding that some taxes be paid in forex, was acknowledging that the multicurrency regime was there to stay.
“The Minister of Transport too passed Statutory Instrument 123 (A) of 2020 which obliges Zimbabwean motorists to pay taxes and other vehicle licences in USD,” said Biti.
“So, if you are asking us to pay all these taxes in USD when we are earning ZWL$, why do you not bite this dog by the head and simply accept the return of multiple currencies.”