Initially, the Treasury had stated that the prevailing dual currency model in which the local dollar is used alongside a basket of currencies would end in 2025 with a full return to the Zimbabwean dollar.
Through S.I. 218 0f 2023 Presidential Powers (Temporary Measures) (Amendment of Exchange Control Act) Regulations gazetted yesterday, the Government said it has amended the Exchange Control Act (Chapter 22:05) in Section 11 (Civil Penalty Orders) by the repeal of subsection (2a) and substitution of (2a).
“The provisions of the schedule, in so far as they expressly or impliedly permit the settlement of any transaction or the payment for goods and services in foreign currency, shall, notwithstanding Statutory Instrument 142 of 2019, be valid until the 31st December 2030,” reads the gazette notice.
Earlier, pension funds and other stakeholders had complained that they are failing to commit to long-term funding as they are sceptical of what will happen to US dollar investments after 2025.
Such funds are considered the most liquid industry, which is critical in terms of resource mobilisation for companies and projects that require patient capital.
The extension of the multi-currency system essentially assures financial institutions and guarantees them leeway to provide long-term loans, which are critical for business growth.
This means up to 2030, registered lenders, banks, or any financial institution that lends foreign currency would receive repayment of the loan or credit in that foreign currency.
While the Government and business leaders agree on the inflation-stabilising effect of multiple currency system, there is a clear consensus on the need to mainstream the use of the local currency in the long term given the need to promote effective domestic monetary policing, which buttressing production efficiencies with a focus on export competitiveness.
Industrialists and business analysts immediately welcomed the development as a positive step for business stability.
“This is a positive development for corporates and economic actors. Prior to this USD could only have a tenure of up 30 June 2025 or earlier.
“The work of a dignified, fungible and stable local currency still remains to be mapped out carefully and effectively,” United Refineries Limited chief executive officer, Mr Busisa Moyo, commented.
Economist Mr George Nhepera who is also Lupane State University Business Clinic development manager, said the move was a key enabler for economic growth, financial stability, and confidence building, which was desperately needed in the financial markets and general business operations.
“This was the ‘elephant in the room’ for many in our country. Once again, we applaud the Government for being on the side of good economic reasoning, which resonates very well with national building and economic prosperity in our country,” he said.
“Evidence-based research has confirmed that multiple currencies shall at best save our country very well for now while building the value of our currency until such a time it can be a world-class currency of national pride and value among our business and citizens.
“This effort is indeed being done through Central Bank digital products such as gold coin and gold back digital tokens, now called ZIG.”
Zimbabwe first adopted the US-dollar-dominated multiple currency system in 2009 and ditched it in 2019. The Government re-introduced the multi-currency system in June 2022 as part of measures to stabilise the economy on the background of resurgent inflation pressures that were driven by speculative market forces and indiscipline by some key business players. Herald
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