The governor of the Reserve Bank of Zimbabwe; Dr J. P. Mangudya on the 26th of March announced that citizens can legally use USDs for local trading. The Reserve Bank of Zimbabwe issued a statement pointing that the reversal of multicurrency ban would avail online financial services hence promoting social distancing.
According to the issued statement, “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 state has argued that the reversal of the multicurrency ban will promote social distancing as people will no longer need to queue in banks for money as trading in the USD will facilitate the smooth running of online financial services.
However, the former finance minister Tendai Biti was against this move as he clearly stated that bringing back the USD wouldn’t work as trading in USD is the reason why Bond notes were introduced.
The former finance minister Tendai Biti was against this move as he clearly stated that bringing back the USD wouldn’t work as trading in USD is the reason why Bond notes were introduced. In his most recent tweets, he said, “The regime unwisely imposed a lockdown from the 30 March without giving workers and business time to organise. Most businesses did not pay statutory payments, PAYE, VAT, QPD & NASSA on 31 March. The regime is now broke. Treasury is empty. They can’t wait to reopen .#WorstGvtInWorld.” Several business and political people have passed comments that the introduction of the USD will not work for both the economy and combating COVID-19
Several business leaders and political big wigs have voiced their concerns with the main point being that de-dollarisation will not help the economy and even combating COVID-19
Some countries have provided their citizens with loans and mortgage freezes to sustain them during the lockdown and promote social distancing while Zimbabwe citizens have been asked to use the USDs that they own.
A few months back the nation introduced RTGS (bond note) accounts and Nostro (USD) accounts, those that anticipated the return of the dollar will be the most comfortable during the lockdown as compared to those that do not own Nostro accounts or have money in those accounts. Therefore the return of the USD is mostly controversial rather than helpful.
It is worth to note that before Covid-19, Zimbabwe was already facing a dying economy with an almost non existing public health system. The UNDP has warned that developing Nations are facing $220 Billion in lost income which could result in almost half of Africa’s jobs being lost.
The coronavirus outbreak threatens to disproportionately devastate the economies of already impoverished countries as they gear up to tackle a health crisis with extremely limited resources.
The socioeconomic hit on poor and developing countries will take years to recover from, UNDP said in a report released on Monday, stressing that income losses in those countries are forecast to exceed $220bn. Nearly half of all jobs in Africa could be lost, it also warned.
With this in mind and what the Zimbabwean government is trying to do to curb the spread of Coronavirus as they say, how physible are these measures?