ZANU PF ended its conference in Gweru on Sunday by adopting a resolution to push for the re-introduction of the local currency and adoption of other currencies including the Chinese yuan as legal tender.
Among several resolutions, President Robert Mugabe’s party which shares power in a coalition government with the two MDC factions, said it would “instruct government to work out modalities for the reintroduction of domestic currency alongside the multi-currency system in order to address the current liquidity crisis and to enable our people to carry out their transactions.”
Zimbabwe abandoned its currency in 2009 after its value was wiped out by hyperinflation which peaked at over 230 million percent.
The country adopted a multiple currency regime which saw the United States dollar, the South African rand and Botswana pula being used as legal tender.
But if Zanu PF has its way, some form of local currency – not necessarily the Zimbabwe dollar – could be introduced to be used alongside the pula, rand and US dollar as well as the currencies of Brazil, Russia, India and China.
The proposal is unlikely to find appetite among Zanu PF’s coalition partners, including Finance Minister Tendai Biti who is secretary general of the MDC-T party led by Prime Minister Morgan Tsvangirai.
Speaking at Manchester University, England, last Friday, Biti said the collapse of the Zimbabwe dollar had left Zimbabweans with mental scars and confidence was still low.
But Biti said a bigger hurdle for the local currency’s return is the slow recovery of the economy.
“As I speak, our imports are about US$7 billion and exports about US$3 billion – so there is a ratio of 3:1. That essentially means we are running a very dangerous current account,” Biti told an audience of academics and students.
“Surely, you can’t return the Zimbabwe dollar when you don’t have the economy to sustain it. Your local currency is a relationship between your imports and exports, and if you have this skewed deficit in your current account, in your balance of payment position, in your capital account, you don’t have the economy to sustain a currency.”
Biti said banks, which had increased their assets from a low base of US$200 million in 2009 to US$4,2 billion today, had played a major role in financing Zimbabwe’s current account deficit as well as the millions of Zimbabweans who live abroad who have been remitting an average US$350 million a year.