Finance and Economic Development Minister Mthuli Ncube has told Parliament that Zimbabweans should desist from using US dollars when conducting transactions locally, adding that it is illegal to do so.
Minister Ncube made the call when he was answering a question from Hatfield legislator Honourable Tapiwa Mashakada who was seeking to understand the rationale behind the promised introduction of higher Zimdollar denominations when the economy was self-dollarising.
In his response, the minister said “Mr Speaker Sir on US dollarisation and so forth. We are aware of what is going on. Of course, it is illegal, they must desist from doing it.
“Also, we are aware of the other conundrum which is the speed of the injection of Zimbabwe dollars into the economy. The speed is governed by our prudence that we should not flood the economy with the Zimbabwe dollar cash.
“We have to be prudent; we have to exchange RTGS dollar for the new Zimbabwe dollar so that we keep the amount of money in circulation the same.
“We do not want excessive growth in the money supply which will then cause currency volatility and push up inflation. So that prudence makes us do things carefully and slowly but in the meantime the economy still needs cash. We can understand what is going on and that is one of the reasons but we are determined that we have to enforce the mono currency in terms of transactions,” he said.
The Finance Minister added that what is currently happening in the economy are effects of transition and that it will take time to settle.
“We also recognise that we are in transition and that transition will take time but we are injecting the domestic cash to make sure that transition can speed up,” he said.
Although the government outlawed the use of the US dollar when transacting locally, most businesses appear to be defying the ban as they are charging their goods in both the local and the US dollar.
The industry has been quoted in the local newspaper calling for the dollarisation of the economy arguing that the local currency is making it difficult to effectively operate.
Cash shortages have been a problem in the country since the government introduced the Bond Notes and pegged it at 1:1 with the US dollar, a decision which they went to discard mid-2019 while introducing the Zimbabwe dollar.
Currently the highest denomination in the economy is a ZW$5 note which is no longer enough to buy anything meaningful and the Minister said plans are in line to introduce ZW$10 and ZW$20 notes.