Zimbabwe will introduce a new currency in the next 12 months, the finance minister said, as a shortage of U.S. dollars has plunged the financial system into disarray and forced businesses to close.
In
the past two months, the southern African nation has suffered acute
shortages of imported goods, including fuel whose price was increased by
150 percent on Saturday.
Zimbabwe abandoned its own currency in
2009 after it was wrecked by hyperinflation and adopted the greenback
and other currencies, such as sterling and the South African rand.
But
there is not enough hard currency in the country to back up the $10
billion of electronic funds trapped in local bank accounts, prompting
demands from businesses and civil servants for cash which can be
deposited and used to make payments.
Finance Minister Mthuli Ncube told a townhall meeting on Friday a new local currency would be introduced in less than 12 months.
“On
the issue of raising enough foreign currency to introduce the new
currency, we are on our way already, give us months, not years,” he
said.
Zimbabwe’s foreign reserves now provide less than two weeks
cover for imports, central bank data show. The government has
previously said it would only consider launching a new currency if it
had at least six months of reserves.
Locals are haunted by
memories of the Zimbabwean dollar, which became worthless as inflation
spiraled to reach 500 billion percent in 2008, the highest rate in the
world for a country not at war, wiping out pensions and savings.
A surrogate bond note currency introduced in 2016 to stem dollar shortages has also collapsed in value.
President
Emmerson Mnangagwa is under pressure to revive the economy but dollar
shortages are undermining efforts to win back foreign investors
sidelined under his predecessor Robert Mugabe.
Mnangagwa told
reporters on Saturday that the price of petrol had increased to $3.31
per liter from $1.32 from midnight but there would be no increase for
foreign embassies and tourists paying in cash U.S. dollars.
Locals can pay via local debit cards, mobile phone payments and a surrogate bond note currency.
With
less than $400 million in actual cash in Zimbabwe according to central
bank figures, fuel shortages have worsened and companies are struggling
to import raw materials and equipment, forcing them to buy greenback
notes on the black market at a premium of up to 370 percent. (Reuters)
Source:- Reuters
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