Zimbabwe has announced plans to introduce a new currency within months. This comes as a shortage of U.S. dollar notes in the country has forced businesses to close down.
In the past two months, there have been acute shortages of imported goods in the country. Inflation has again shown its hideous shadow. The price of fuel was increased by 150 percent on Saturday.
Zimbabwe started using a basket if currencies that include the US dollar after its own currency was in was wrecked by hyperinflation in 2009.The inflation explosion was triggered by Western sanctions that remain to this day, as well as corruption.
But the current problem us that there is not enough hard currency in the circulation to back up the US $10 billion of electronic funds trapped in local bank accounts. This has prompted demands from businesses and civil servants for cash which can be deposited in banks and used to make payments.
In responds to the crisis, Finance Minister Mthuli Ncube told a townhall meeting on Friday that a new local currency would be introduced within months.
He stated, “On the issue of raising enough foreign currency to introduce the new currency, we are on our way already, give us months, not years”.
The shortage is so acute that Zimbabwe’s foreign reserves can currently cover only a few weeks of imports.
Zimbabwe was once one of the best agricultural economies in Africa. But sanctions imposed by the United States and United Kingdom, coupled with corruption have destroyed that record.
Zimbabwe should ask Rwanda’s Paul Kagame for advice on how he turned around Rwanda’s economy, making it one of the most attractive in the Global South.