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Key economic players back Zim dollar

26 Jun, 2019 - 14:06 0 Views
Key economic players back Zim dollar

eBusiness Weekly

Munyaradzi Musiiwa
Confederation of Zimbabwe Industries, bankers and exporters have thrown weight behind the reintroduction of the local currency as this will boost public confidence and will ease the foreign currency demands.

Speaking during roundtable discussions among CZI, bankers and exporters, the industries said the reintroduction of the local currency will enable an appropriate monetary policy, with clearly specified milestones, will need to be put in place which supports the national currency and results in abolishing the multi-currency system.    

CZI also said the introduction of the local currency will ease demand of foreign currency thereby stabilizing the economy.

“Introduction of a national currency implies that the country has now moved away from a multi-currency regime, and any form of pricing which is based on the US dollar. Consequently, an appropriate monetary policy, with clearly specified milestones, will need to be put in place which supports the national currency and results in abolishing the multi-currency system. The US dollar will then become a currency strictly only used for external transactions only. This is the long term objective of the liberalisation and currency reform agenda,” reads a collective statement by Confederation of Zimbabwe Industries, bankers and exporters.

The three parties also agreed with President Emmerson Mnangagwa that there was need to stabilise the RTGS currency.

 “Stabilisation of the value of RTGS balances is the first and foremost precondition for any consideration on the introduction of a national currency. However, no national currency will be trusted, have the confidence of the people, or maintain its value, unless fiscal and monetary prudence are maintained. There are several preconditions for the introduction of a national currency. Two of these fundamental preconditions are:

Firstly, the Budget Deficit should be in surplus or be a very small negative proportion of GDP (2 percent – 3 percent).

Currently, the Ministry of Finance is running a fiscal surplus. This must be continued as far as feasible until the end of 2019 and beyond.

Secondly, the printing of currency notes must remain strictly under 10percent of the monetary or deposit base of the financial system. This is a general rule of thumb used by monetary experts,” reads part of the statement. 

It was also recommended Government should harmonise messaging and policy actions and solidify support for both the RTGS dollar and the interbank market in order to stabilize the RTGS currency.

“There must be one market, and one rate at which the entire economy operates. There should be no preferential or different rate for government, special sectors or any interests whatsoever.

Government messaging and policy actions should all be harmonized and solidify support for both the RTGS dollar and the interbank market. Vacillations between what government and prominent people in government say, and what gets done on the ground should be avoided at all costs, to instill confidence and trust in financial system.”

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