ZIM needs $1 Billion to deal with current liquidity crisis-Chakravarti

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TOP government advisor Professor Ashok Chakravarti said Zimbabwe currently needs $1 billion to deal with the current liquidity crisis.
Professor Chakravarti was addressing the Women’s Coalition of Zimbabwe organised indaba which ran under the theme: Women Unmasking the Zimbabwe Economy in Harare.
“Dollarisation cannot be a successful strategy for the long term solutions facing the country. We are suffering from our decision not to move from the US dollar after the situation had partially normalized and now we have about US$300 million in circulation down from about US$ 600 million in 2009,” said Chakravarti.
“We need precisely around US$1 Billion to normalize the situation,” he said.
“Dollarisation was a result of the market forces and the government only rectified it through its budget in 2009. It is not a long term solution to solve the economic problems bedevilling the country…It has only worked in countries such as those in South America like Panama which has some sort of government to government pacts with the US government, thus it has a steady supply of the US currency,” he said.
However, he said despite the short supply of the greenback due to the absence of a steady supply, the good thing about dollarization was that it kept prices under control.
Turning to solutions, the former University of Zimbabwe economics Professor said the country should adopt the currency of its biggest trading partner South Africa as a matter of emergency.
“Let’s adopt the Rand and remove exchange control at our borders with South Africa. Having our own national currency is another option but the biggest problem is that people have lost faith in our own currency as a result of the previous experiences in 2008.
“I have told the government to adopt the Rand for the past nine years but, it is too reluctant to do so,” he said.
Chakravarti urged Zimbabweans not to panic in the current economic environment though he warned that prices of commodities will slightly continue to rise.