4 February 2014

Zimbabwe: Zimdollar Return Inevitable - Biti

Photo: IRIN
Zimbabwe dollars

MDC-T shadow minister of finance Tendai Biti on Tuesday said the unpopular Zimbabwean dollar will inevitably come back whether the Zanu PF government likes it or not.

"We cannot print the US dollar, our currency printing press is not working and it will work sooner rather than later," Biti told reporters at his party's Harvest House head office in Harare.

"They will have no option, they have struggled to pay salaries and this will deepen even further and the only way out will be to revert to the Zim dollar."

After years of hyper-inflation which peaked 231 million percent, the local currency was finally ditched in January 2009 in favour of a basket of multiple currencies among them the United States dollar, South African rand and the Botswana pula among others.

The list has since been expanded to include the Chinese Yuan, Indian rupee, Japanese yen and Australian dollar, in a move that will effectively make those currencies legal tender.

However, Biti said the currencies will not bring any change.

"These new currencies that they are bringing don't bring any difference as long as the economy is dead. The economy is dead and we are in an era of deflation," Biti said.

"We as the MDC we have no doubt that the Zim dollar is coming back. We have no doubt about it. The Zimbabwean dollar will come back because they (Zanu PF government) are in a deficit situation, they have moved from prime balancing or budget balancing," Biti told journalists in Harare this afternoon.

The former finance minister added: "They moved away from that into deficit financing. They are borrowing money. Now when you go into deficit financing into will get into a situation where you have to repay the person that you borrowed. They are borrowing because they are not collecting sufficient revenues to cover their current expenditure."

The Reserve Bank of Zimbabwe (RBZ) recently announced that the Chinese Yuan, Japanese yen, Indian rupee and Australian dollar will be accepted, with Zimbabweans and exporters able to open accounts in the various currencies.

Economists however said the RBZ's move would not make much of a difference.

"We are already using the pound, euro and pula but you hardly see these currencies in circulation in most parts of the country. The new currencies are likely to suffer the same fate," said economic commentator John Robertson.

Biti said the financial statements of the Zimbabwe Revenue Authority in the last quota of the year failed to meet its target by 18 percent warning that the "deficit is going to widen."

"What we do know as MDC is that they are no longer collecting sufficient to pay the wages. So they are going to get into these increasing situations where they will fail even to pay salaries," Biti said.

Biti said the Zanu PF government will have to print money to easy the situation.

"They will have to print money to monetize this deficit that they are creating, so whether they like it or not the Zimbabwean dollar will come back just as much as the US dollar came against their volition," Biti said.

Biti said there is need to deal with the supply side of the economy. "We need to get industry get kicking again and working again."

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