The Government of Zimbabwe is considering the introduction of a local currency to replace the current multi currency regime as part of a wide spectrum of monetary interventions to ease the country’s economic challenges.
It has been argued that Zimbabwe’s economic challenges, particularly the liquidity crisis and the associated ripple effects, were caused in large measure by the sustained subsistence use of a reserve currency, the United states dollar.
By Audreyanna Makara
This saw an influx of traders into Zimbabwe who mopped the dollar out without a corresponding replenishment through exports.
As such, the introduction of a local currency is envisaged to significantly reduce challenges around liquidity, encourage domestic consumption as well as stimulate exports.
Commenting on currency reforms, Economy analyst Mr E. Muchichwa said that local currency can only work if it is introduced within the correct macroeconomic environment.
He also said that there should be concurrent efforts to stimulate local production, the proceeds of which would then buoy the local currency.
For this currency reform to work, there has to be cooperation from the legislative community through strict enforcement of monetary laws to curb vices such as parallel market exchange rates.
In conclusion there has to be a whole concentrated effort from all the stakeholders, including the Reserve Bank of Zimbabwe as the chief monetary authority, the legislature, law enforce as well as good political will deal decisively with issues around corruption.