HARARE – Zimbabwe has “de-dollarised through the back door,” the Movement for Democratic Change (MDC) said on Wednesday after the Reserve Bank of Zimbabwe unveiled its delayed Monetary Policy Statement.
Reserve Bank governor John Mangudya announced that Zimbabwe, without its own currency for a decade, was allowing its surrogate currency, RTGS dollars, to float against other major currencies, abandoning an official but artificial parity with the United States dollar.
Banks will set the new exchange rate for the surrogate currency, which the RBZ hopes will address the country’s worsening economic crisis.
Tendai Biti, the former Finance Minister and MDC MP for Harare East described the move as “disastrous”.
“Modern functional States are founded on trust and transparency. That clearly is not part of the DNA of Zanu PF. The regime today disingenuously and mendaciously de-dollarised the economy by informally re-introducing the Zimbabwe dollar now called the RTGS dollar through the back door,” Biti said.
“It’s a disaster to embark on currency reform in the absence of key fundamentals to back that currency. These include market confidence, reserves, a decent capital account and a stable macroeconomic environment. This is elementary.”
Biti warned that instead of arresting economic decline, the RBZ move would create new “shocks”, including hyperinflation.
“Regrettably, the economy now enters another period of self-induced shocks that will see salaries and values being devalued, hyper-inflation, shortages and queues. It’s a dog’s breakfast,” the MDC deputy chairman said.
Zimbabwe has not had a local currency since 2009 when it abandoned the Zimbabwe dollar due to hyperinflation that reached 500 billion percent, according to the IMF. To curb the ruinous inflation, Zimbabwe adopted a multi-currency system dominated by the U.S dollar.
However, a shortage of cash dollars pushed the government in 2016 to issue a surrogate currency called bond notes, to trade alongside electronic money, which are funds electronically deposited into bank accounts.
Most Zimbabweans are paid electronically into their bank accounts, but they cannot easily convert those funds into cash.
National People’s Party leader Joice Mujuru said on Twitter: “Since day one, I have said bond notes are not going to change the economic situation. I even went to the extent of approaching the courts. Renaming or revaluing the bond note and building policies to cover-up the same mistake won’t help. Its back to the drawing board.”