HARARE – Zimbabwe has launched a new financial ‘currency’ after a shortage of dollars pummelled its economy and sent millions into poverty.
The central bank began trading the discounted replacement currency on Friday, as it attempted to ease the country’s cash crunch. Bond notes and electronic dollars, locked in individuals’ accounts for months due to a lack of cash, will be merged into a separate currency called RTGS dollars, the central bank said. The move effectively reintroduces a national currency as Zimbabwe’s government battles to restore normality to the country’s economy.
The southern African country scrapped its own currency in 2009 and began using the dollar in order to battle hyperinflation.
In 2016 the central bank printed bond notes that were pegged to the dollar in theory, in order to fund government spending.
But with shortages of fuel and banknotes hitting Zimbabwe’s economy and less than 10 percent of the country in formal employment, consumers face increased economic misery.
President Emmerson Mnangagwa’s administration has brought in the new measure to bring normality to the country’s currency markets.
George Guvamatanga, the permanent secretary in the Finance Ministry., said: “This is a measure that removes most of the distortions that were impacting the market.”
But opposition party leader branded it “insanity”.
Tendai Biti said: “They have through the back door reintroduced the Zimbabwe dollar.”
The southern African country’s central bank is selling US dollars to banks at 2.5 RTGS dollars.
They had previously been worth the same.
The Reserve Bank of Zimbabwe (RBZ) said it would carry out a “managed float” of the surrogate economy.
Finance Minister Mthuli Ncube intends to introduce a fully fledged new currency within a year.
Commercial banks reopened on Friday after a bank holiday.
Members of the public should, in theory, be able to go to banks on Monday and buy US dollars with bond notes or electronic dollars