He said separating the parity between the real time gross settlement accounts (RTGS) and foreign currency accounts (FCA) was the beginning of currency reforms which are necessary for pushing the country\u2019s economy in the right direction.<\/p>\n
\u201cThere is a balance between preservation of value and removing price distortions,\u201d said Prof Ncube. \u201cThe separation of accounts between the FCA and RTGS accounts was the beginning of currency reform.\u201d<\/p>\n
Prof Ncube said he was no longer in favour of adopting the rand as that would still depend on the availability of US dollars.<\/p>\n
\u201cI also hear that the citizens are pushing towards adopting the rand, I even argued for it years ago and there was a reason, you know, if we are going to assume the rand as our currency we first of all have to acquire the rand and we need US dollars first to purchase the rand, in the long term Zimbabwe needs its own currency,\u201d he said.<\/p>\n
\u201cOur job is to introduce a currency that will be stable and less volatile. Dealing with the fiscal side is the first order to move towards a stable currency, after all what we have now is fiscal policy and now monetary policy and we have to tighten the belt on the currency volatility.\u201d<\/p>\n
Adopting the United States dollar as the country\u2019s sole legal tender is not the way to solve Zimbabwe\u2019s macro-economic challenges, said Prof Ncube.<\/p>\n
\n
This comes as different companies and individuals have been pushing for the re-dollarisation of the country\u2019s economy, with claims that the shortage of hard currency is choking business operations.<\/p>\n
Recently, beverages giant Delta Corporation announced that it would start selling its products in hard currency, citing that operations were being adversely affected by foreign currency shortages.<\/p>\n
The decision was later reversed after consultations with Government.<\/p>\n
Instead, Prof Ncube said Zimbabwe\u2019s solution lay in currency reforms.<\/p>\n
\u201cThe issue is shortage of forex with the corporates, the silver bullet is about currency reform, if we get that right the corporates can access foreign currency whenever they need it, the currency reform agenda is also impeding foreign investment, if investors cannot take their money out of the country then we cannot attract investors,\u201d he said.<\/p>\n
\u201cA long term solution to the crisis is, currency reforms, currency reforms, and currency reforms; and ending arbitrage opportunities in the market, accepting the US dollar as the only legal tender is not currency reform, its submission.<\/p>\n
\u201cAs a nation if we accept US dollar as our sole currency, then it means that we are afraid of currency reform and that\u2019s capitulation.\u201d<\/p>\n
This also comes at a time when industry has also raised a red flag towards re-dollarisation.<\/p>\n
Confederation of Zimbabwe Industries (CZI) president Sifelani Jabangwe is on record saying re-dollarising the economy is counter-productive as it stifles growth and could halve the size of the economy.<\/p>\n
\u201cWe see more companies wanting to sell in US dollars, but the issue is that we don\u2019t need dollarisation as an economy,\u201d said Mr Jabangwe. \u201cThe economy will shrink by as much as 50 percent if we dollarise, so for me it is not the right way to go.<\/p>\n
\u201cWe have seen it with US dollars in the past that we won\u2019t be competitive when using the US dollar.\u201d<\/p>\n
An economist with a local commercial bank Joseph Mverecha has on countless times weighed in, disapproving the re-dollarisation of the Zimbabwean economy.<\/p>\n
\u201cRe-dollarisation will sustain disintermediation and dislocation in the economy, to the extent that foreign exchange access is non-existent for the vast majority of Zimbabweans who are non-exporters and constitute the largest segment of the population,\u201d said Dr Mverecha.<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"
Finance and Economic Development Minister Professor Mthuli Ncube yesterday said the country will have its own currency within the next 12 months, as Government is frantically working on raising enough foreign currency to anchor it. Addressing delegates at a \u201cRoad to Davos\u201d townhall meeting held in the capital yesterday, Prof Ncube said adopting the United […]<\/p>\n","protected":false},"author":84,"featured_media":1289,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,6],"tags":[83,150],"class_list":{"0":"post-1596","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-all-news","8":"category-economy","9":"tag-economy","10":"tag-ncube"},"yoast_head":"\n
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