Zimbabwe opposition labels govt's 'local dollar' plan as 'madness'

Zimbabwe’s opposition on Monday termed the government’s plan to print a local version of the US dollar as ‘madness’. The government has introduced bond notes as a stop-gap measure against a crippling cash shortage.

A recent shortage of foreign notes prompted central bank governor, John Mangudya, to unveil measures including limiting withdrawals to $1000 per day and printing a series of tokens, called bond notes, rated at par with the US dollar.

Zimbabwe opposition calls local 'US dollar' plan 'madness' https://t.co/Ud0MJKRwlC

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The Bond notes will complement bond coins, which were introduced in 2014 to tackle a lack of small change.

“The purpose of the bond coins was to deal with the change problem. The purpose of the bond notes is to deal with an incentive for exporters. But I think people are now confusing that the bond notes are now coming here to cater for shortages. No. There is no relationship. This is an export incentive scheme,” Mangudya said.

Zimbabwe adopted the US and South African currencies in 2009 after hyperinflation peaked at 231 million percent, rendering the national currency worthless.

In an interview with Africanews, a Zimbabwean economist, Vince Museve, said that the move was a good idea to address the cash crisis, but pointed that the citizen were having issues trusting the government.

“Honestly speaking it not a bad idea to say listen we want our local currency back to the dollar on a one to one basis, it is absolutely an awesome idea. But the problem is that no one trusts this government,” he said.

Economists blame the cash shortage on lack of investment and a trade deficit which saw the country’s import bill standing at $490m in the first quarter against $167m in exports.

AFP