THE government is likely to adopt a dual currency system that could bring
back the Zim dollar alongside the United States currency if the government
fails to resolve the liquidity crisis and to convince multilateral
institutions to lend money, an analyst has said.
Zimbabwe ditched its local currency after being rendered worthless by
hyper-inflation which topped 500 billion percent and adopted the
multi-currency system dominated by the US dollar in February 2009.
It has enjoyed an economic growth rate averaging seven percent since then
and inflation fell to 0.86 percent in September but GDP growth is seen
slowing to three percent this year after President Robert Mugabe's Zanu PF
party claimed a decisive victory in the July 31 elections disputed by the
Finance minister Patrick Chinamasa has said the regime will continue
indefinitely but Tony Hawkins, the head of the University of
Zimbabwe's Graduate School of Management said the tightening liquidity in
the economy could force a rethink and that there was always the risk that
politicians would seek a "superficially attractive" way out to finance
"I suspect - perhaps fear - that the government will opt for some dual
currency option," said Hawkins in a presentation of the 2014 economic
outlook on Wednesday.
An International Monetary Fund (IMF) delegation is in the country to
assess progress made in implementing the Staff Monitored Programme (SMP),
which if successful, could help it clear $10 billion in external debts and
give it access to new credit from international lenders although that is
unlikely to happen soon.
"Given the IMF forecast of a sluggish global economy and the third
successive year (in 2014) of decline in non-fuel commodity prices,
Zimbabwe can expect little in terms of an external stimulus to growth," he
"This means growth must be domestically-driven in an economy where the
government budget is under enormous pressure and there is no scope for a
Information minister Jonathan Moyo recently said the Zanu PF party
election manifesto left the door open for the return of the local currency
to circulate along with the multiple-currency, although not in the
The government has adopted a new economic blue print, Zimbabwe Agenda for
Sustainable Socio-Economic Transformation (ZimAsset) which projects a GDP
growth of 6.1 percent in 2014 and 9.9 percent by 2018 but Hawkins said the
plan failed to explain where the investment would come from.
President Mugabe told a party meeting on Friday that government expects
more money from diamond sales after the European Union removed sanctions
on the state-owned Zimbabwe Mining Development Corporation.