( 3 minutes read)
· Zimbabwe has switched over to dollar, after as a measure to
protect the country from severe financial crisis
· The statement issued by the government said that it was
switching over to the old system for making it easier for the people
to transact business during the difficult period by making available
an option to use free funds to pay for goods and services chargeable
in local currency.
Zimbabwe has switched over to dollar, after as a measure to protect
the country from severe financial crisis. The immediate reason for the
change of mind seems to be Covid-19, since the country needs immediate
deliverance from the foreign exchange crisis. It is not clearly
known whether the present move would force the US to review its
earlier decision to put the county in the negative list. That also
affected the aids and help from several other sources including the
World Bank and IMF.
Harare banned the use of foreign currency as legal tender last June
after having used a basket of currencies. Hyperinflation forced the
government to ditch the Zimbabwean dollar in 2009. Thereafter, the US
dollar became the main currency for payment of goods and services for
domestic use as well. However, a shortage of dollars forced the
government to introduce a quasi currency called the bond note which
was supposed to be equal to the US dollar in 2016.
In February 2019, the southern African country launched currency
reforms. That led to reintroducing the local currency and banned the
use of the US dollar in a bid to solve a monetary crisis. The new
experiment with the currency also did not go well with the economy.
Inflation spiked and now it is at 540 percent.
The statement issued by the government said that it was switching over
to the old system for making it easier for the people to transact
business during the difficult period by making available an option to
use free funds to pay for goods and services chargeable in local
currency.
Experts are skeptical whether the present experiment also would
succeed since the problems are endemic in Zimbabwe. Zimbabwe is again
back to square one as the only country in the world without a currency
of its own.
