Harare – President Emmerson Mnangagwa has said that government is set to introduce new currency before year end even though many have questioned the country’s readiness to back up the plan.
According to the State run television broadcaster, Zimbabwe Broadcasting Corporation, the President said this while addressing a rally in Southlea Park, Harare South this morning.
The subject of contention has been that the country which currently owes billions of dollars to both external and internal creditors does not have enough foreign reserves to back up the introduction of a new currency, raising concerns that the new currency will quickly loose value on the market.
The country has been using a basket of currencies since the period of hyperinflation in 2008 where it suffered dismal currency instability.
Currently the country is facing acute shortages of foreign currency and inflation broke to its highest level in a decade in February 2019. It has since maintained the surge reaching 75.86 percent in April 2019.
Government introduced the interbank foreign exchange market in February 2019 and subsequently denominated the bond notes and coins and the electronic balances into RTGS$ so as to stabilise inflation and the exchange rate.
The move has so far proved distant of achieving the intended aim as inflation keeps on scaling up pushed by escalating rates on the parallel market.
Meanwhile, rates on the official market have started picking up following the recent scrapping of fuel subsidies.
Earlier in April, Finance Minister Professor Mthuli Ncube during a visit to the United States said the nation will have a new fully-fledged currency in the next 12 months as part of measures the government is seeking to stabilise the ailing economy.
This was however, met with widespread criticism as some economists call the decision ill-timed and destructive.
“Just when you think Zimbabwe could not pull another stupid rabbit out of the hat, it does so. Ncube says a new Zim currency in 12 months. What a stupidity,” American Economists Professor Steve Hanke tweeted soon after Ncube’s announcement.
Others including the main opposition party, MDC Alliance have been calling for the adoption of the South African rand or to fully re-dollarise as the immediate solution to the country’s currency woes.
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Raynold Mhotseka is a Journalism and Media Studies student at the University of Zimbabwe. He serves as a news writer at financial research firm, Equity Axis where he is currently on attachment.