Even Finance Minister Mthuli Ncube recognises the level or redollarisation now present in the Zimbabwean economy. Instead of acknowledging that this proliferation of foreign currency and its wide use is a result of failed government policies and an unpredictable monetary policy he thinks there is another reason for all this.
According to the dear Minister people are seeking refuge in foreign currency because there aren’t enough Zimbabwean dollars to around. Given the partly money-driven inflation we are currently experiencing one is left to wonder what shortage is he referring to?
We … know that one of the reasons why the US dollar continues to be used is that we do not have enough Zimbabwe dollars in circulation. There is a cash deficit of domestic currency.
That is why we have said we want to introduce more cash in a very prudent way. We have up to $5 notes now.
We will move to $10, $20 and sometime in the future if we need a higher denomination, we will make an analysis and determine. There is no urgency in that.Finance Minister Mthuli Ncube
To be fair there still is a cash shortage in Zimbabwe and years after it all began Zimbabweans still have to resort to the black market in order to get their own currency.
However to be honest the bulk of the Zimbabwean dollar has always been in the form of the famed RTGS dollar. There wouldn’t be a problem had it not been for the Finance Minister’s ill advised policy to introduce a transaction tax that saw people shunning the RTGS dollar in order to avoid the punitive tax.
Add to that the fact that Ncube’s monetary colleagues the Reserve Bank of Zimbabwe has shown a disturbing willingness to freeze people’s accounts at every turn. They even banned cashout’s for the entire economy! That has consequences.