According to the international publication, Bloomberg, the government of Zimbabwe is going to issue real Zimdollar notes and coins soon. These will eventually replace bond notes and coins we have been using for the past four years.
A brief history of the bond
The current RBZ governor, John Mangudya, introduced bond coins four years ago. According to him, there was a change problem in Zimbabwe as people did not have access to USD coins. The coins would trade at par with the USD.
Many people suspected this was a ruse to introduce the Zimdollar by the backdoor. Four years later those sceptics were proven right as on June 24 the government made the Zimdollar the sole legal tender.
Currently, the bond notes and coins in circulation, as well as electronic funds in our bank accounts (confusingly called RTGS), constitute the Zimdollar. Cash shortages persist and there is a 2% tax every time you use electronic money to transact.
The government is doubling down on the Zim dollar
The Zim dollar was introduced in February of this year. This was also the same time the government finally abandoned its 1:1 fantasy and admitted that the bond/RTGS was not equal to the USD. Since then the new currency has lost about 900% of its value.
In June the economy was on a self dollarisation path with most shops now asking for payment in USD or equivalent. That is when the government made the Zim dollar the sole legal tender in a bid to stem this tide.
The price increases have continued
Despite this gamble to introduce the Zim dollar, prices have continued to rise. It’s the reason we created this blog to attempt to keep track and make sense of Zimbabwean price increases.
Fuel prices have been increased four times in the past two weeks alone. Diesel currently sells at $9.36 from $9.27 last week and petrol is selling at $9.12 up from $9.09 last week. With power shortages throughout the country, everything goes up whenever fuel goes up.
Is printing the Zimdollar a good thing?
Like everything the government does it really depends on how they do it. The fact that Bloomberg a foreign publication knew this before we did is not encouraging. The fact that this is probably not going to be done through Parliament is also not encouraging.
The entire economy is reeling from multiple shock policies that are introduced on a whim by the president, his Finance Minister and the RBZ governor.
These three, tend to derive perverse pleasure from shocking the economy with their surprise policies. Economies never do well when subjected to such acts and the Zimbabwean economy has endured a lot.
In the past the Finance Minister has claimed that something will be done by December creating an impression that whatever policy he is referring to would be diligently and gradually introduced, only to turn around and do it immediately without consulting anyone except his principal the president.
If this pattern is followed with the Zim dollar there is really no predicting how the market reacts. As people get used to his antics people might just take this in a stride or indeed be happy this might solve the three-year-old cash crisis.
Or there will be panic and chaos as a confused population try to make sense of what they will perceive as another currency. I think people will take it all in a stride.
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