President okays US dollar use

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©️ PRESIDENT Emmerson Mnangagwa has gazetted Statutory Instrument 85/20, which will allow citizens and businesses to charge goods and services using the United States (US) dollar as part of combating the spread of coronavirus (Covid-19).
This comes after the Reserve Bank of Zimbabwe (RBZ) governor John Mangudya last week re-introduced the US dollar, barely a year after adopting the Zimbabwe dollar as the sole currency of trade.
The Zimbabwe dollar had been abandoned in February 2009 after it had become worthless due to hyperinflation.
According to the International Monetary Fund (IMF), the inflation had scaled past 500 billion percent.
However, through an extra-ordinary Government Gazette issued out on Sunday, Mnangagwa, regularised Mangudya’s announcement, allowing people to pay for goods and services using “free funds”, which include money lawfully held and earned in foreign currency by any person.
“It is hereby notified that His Excellency the president, in terms of Section 2 of the Exchange Control Act (Chapter 22:05), has made the following regulations: these regulations may be cited as the Exchange Control (Exclusive Use of Zimbabwe Dollar for Domestic Transactions) (Amendment) Regulations, 2020 (No.2), the Exchange Control (Exclusive Use of Zimbabwe Dollar for Domestic Transactions) Regulations, 2019, published in Statutory Instrument 212 of 2019, is amended by the insertion of the following Section after Section 5.
“In terms of the Statutory Instrument, people are allowed to pay for goods and services chargeable in Zimbabwe dollars, using foreign currency at the prevailing rate on the date of payment.
“The payment envisaged in Subsection (2) may be done electronically through a foreign currency account or in cash or through any electronic payment,” the Government Gazette reads.
During his announcement last week, Mangudya also suspended Finance minister Mthuli Ncube’s recently introduced managed floating exchange rate system, in a bid to provide greater certainty in the pricing of goods and services in the country.
While these new policy decisions, including the re-introduction of the multiple currency system, are only for the duration of the coronavirus crisis — and also not meant to do away with the “little-loved” Zimbabwe dollar — experts said this potentially put the long-term fate of the local currency in jeopardy.
But Mangudya said the surprise policy change was an additional measure meant to mitigate the impact of the lethal coronavirus that has killed thousands and wreaked havoc around the world.
“Pursuant to His Excellency, the President’s March 23, 2020 address to the nation on additional measures to mitigate the devastating impact of Covid-19 on the Zimbabwean society and the economy, government though the Bank, would like to advise the public that it is making it easier for the transacting public to conduct business during this difficult period by making available an option to use free funds to pay for goods and services chargeable in the local currency.
“This intervention takes into account the country’s limited access to foreign finance, which is adversely affecting the country’s balance of payments position.
“The dispensation to use free funds will not only make payments for goods and services easier, but will also promote social distancing, as banks will be able to provide digital financial services to their customers, that include producers of gold, tobacco and cotton, and recipients of diaspora remittances,” Mangudya said last week.

 

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