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Thursday 17 June 2021
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Zimbabwe accepts foreign currencies to avert economy collapse

Zimbabwe, mirred in a decade-long economic crisis, Thu rsday announced it was fully accepting foreign currencies as legal tender in its business transactions in an effort to prop up the economy, improve the inflow of basic goods and ease trading. Until now, only a select group of businesses were allowed to charge goods and se rvices in foreign currencies.

In a budget speech, Finance Minister Patrick Chinamasa said the country would no w adopt a number of currencies, among them the South African rand, British pound sterling and the American dollar, as legal tender.

He said government would also now levy taxes, charge its services and partially pay civil servants in foreign currency with immediate effect.

“Government is allowing the use of multi-currencies for business alongside the Z imbabwe dollar,” he said.

Because of hyper-inflation in the country, currently estimated at over a trillio n per cent, the local currency had become worthless and most transactions were c o nducted in foreign currencies.

Chinamasa said ‘dollarisation’ would help prop up the economy, particularly its productive sector, which was not only saddled with worthless Zimbabwe dollars, b u t also had difficulties getting the local currency from formal markets.

For years, the Zimbabwean dollar has been rationed by the central bank because i t was in short supply.

Chinamasa said public schools, universities, hospitals and utilities would now c harge in foreign currencies, while the government would start paying civil serva n ts in foreign currency from next month.

Most civil servants, including teachers, doctors and nurses have gone on strike, demanding to be paid in foreign currencies. Chinamasa said the government would start levying taxes in foreign currency imme diately, to build up reserves to pay its workers.

The budget itself was crafted in three currencies – the Zimbabwe dollar, the Sou th African rand and the US dollar.

Zimbabwe’s economy has been in crisis for almost a decade, widely blamed on gove rnment mismanagement and the controversial seizure of white-owned farms for rese t tlement.

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