Finance and Economic Development Minister Professor Mthuli
Ncube said on Tuesday Government was not in a hurry to issue new Zimbabwean
dollar notes/coins, but rather focused on the need to replace soiled bank notes
and coins.
Professor Ncube told journalists in the capital, Harare,
that priority was also on establishing the extent of demand and the amount of
physical cash required by the market.
The Treasury chief’s remarks follow recent media reports
that Zimbabwe would soon issue out a new regime of bank notes and coins after
it recently reintroduced domestic currency after scrapping the local unit in
2009.
After banning the multi-currency regime in June, Zimbabwe’s
sole legal tender is now constituted by real time gross settlement (RTGS)
balances, bond notes and coins, which collectively represent the new Zimbabwean
dollar.
Asked if he will introduce a new regime of Zimbabwe dollar
currency, Prof Ncube retorted; “Not just yet, when we are ready we will let you
know ourselves; officially.”
He said at the moment the focus was on replacing worn out
and soiled bank notes and coins as well as determining and closing gaps in
terms of the quantum required.
“The Zim dollar as things stand is basically bond notes,
RTGS and bond coins; that is the official position; that is where we are right
now. When we are ready to do anything else we will let you know,” the Finance
Minister said.
On the need to increase physical cash in circulation, given
the cash crunch that sees unscrupulous dealers charging steep premiums for one
to convert electronic balances to physical cash, he said the quantum will be
empirically determined.
“There is a process for introducing additional cash into
the market, as determined by demand. There is a formula and scientific approach
of doing it, which the Reserve Bank of Zimbabwe uses. So, that’s the
methodology that is going to be used from time to time,” the Treasury boss
said.
Minister Ncube said every country should have its own
domestic currency, which citizens must love, use and be proud of. In Zimbabwe,
this entails using the Zimbabwe dollar.
Since February 2009 Zimbabwe used a basket of currencies
commonly referred to as multi-currency system, dominated by the US dollar for
most domestic transactions.
Later in 2016, the southern African country also introduced
bond notes and coins as an export incentive, but this was after it started
experiencing US dollar cash shortages.
The bond notes and coins exchanged at par with the US
dollar.
But after converting all US dollar electronic balances to
local currency in February, Zimbabwe liberalised its foreign exchange regime
through the interbank market; starting at 2,5 RTGS dollars to 1 US dollar.
The RTGS dollar’s exchange rate has since lost ground
against the green-back on the interbank market, sliding from 2,5 to the dollar
in February to about 10 to 1 at the moment.
Amid an unrelenting dollar crunch for a country heavily dependent
on imports due to constrained productivity, Zimbabwe’s annual inflation raced
from 5,39 percent in September last year to 176 percent in June this year
before Government stopped its publication. Herald
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