“As we have always said, you cannot bring in a currency when there is no production, single digit inflation and fiscal consolidation.“Fiscal consolidation means two things. You must clear your debt and you must have a budget surplus.“All these things were not in place, yet the government enforced the local currency and naturally it has been eroded by inflation and the economy has begun to re-dollarise,” economist and Africa Economic Development Strategies (AEDS) executive director, Gift Mugano, said.
“The challenge that we have is policy inconsistency. What are we saying about the US dollar? Are we using the Zim dollar or the US dollar?“If we are using the local currency, why are we taxing people in the US dollar and why are we exempting others?” Mugano asked.
He also said Ncube’s recently announced Zim dollar currency stabilisation taskforce, which he will chair, would not work.
“I think the reason why the government doesn’t want to admit it is because if we officially dollarise then government would be obliged to pay civil servants in foreign currency, and the government does not have that kind of money.“The other problem with it is that it has to be earned, unlike the local currency which can be printed. That is where the issue is,” Kadenge said.