Govt should establish commission to monitor currency issues
The government should establish a commission that will look closely at the country’s currency issues amid indications that the South African rand is the preferred currency, an economic consultant has
BY VICTORIA MTOMBA
Speaking at a Poverty Reduction Trust Forum meeting held in the capital yesterday, economic consultant, Rongai Chizema said since Statutory Instrument 133 of 2016, which ushered in the bond notes, would lapse in six months, there was need to come up with a currency commission, which would advise the country on the way forward with regards to which currency to use.
“We take the six months window to have the currency commission that will have a small team of experts that will discuss the cash crisis, currency issues and financial sector confidence,” he said.
Last month, Finance minister Patrick Chinamasa withdrew plans to fast-track amendments to the banking legislation to embrace bond notes.
The process is currently underway.
Chizema said the commission should be inclusive and broad-based and Zimbabwe has the human capital to be part of the commission.
Central bank governor, John Mangudya has promised the setting up of an independent board to monitor printing of bond notes and ensure that the notes in circulation do not surpass the $200 million mark that is guaranteed by the Africa Export and Import Bank.
Bond notes worth $17 million are currently in circulation.
Chizema said the rand was the most desirable currency for the country, as Zimbabwe has direct trade links with South Africa and most banks have more of the currency than the United States dollar.
He said if all transactions were conducted in the rand, prices would fall by 60%.
Chizema said the country lost a decade between 2000 and 2008, losing half of its gross domestic product, in the process weakening economic sectors.
He said to date, Zimbabwe has not been able to restore half of that lost capacity, even after the adoption of the multicurrency framework adding that the government did not come up with a legislative framework to support the multicurrency regime.
Chizema said the country has been consuming more than it was producing and had limited access to foreign lines of credit and foreign direct investment which was at $500 million in 2015, far below than the $4 billion Mozambique received during the same period.
Zimbabwe has been using a basket of currencies since 2009, which is credited with stemming hyperinflation.