Reserve Bank of Zimbabwe Governor, Dr John Mangudya says the country cannot afford to fully dollarise as the move will be detrimental to the socio-economic growth of the country.
While some quarters have been clamouring for full dollarisation of the economy to stabilise the economy, the RBZ has said 60 per cent of the inflationary pressures are imported, hence dollarisation is a recipe for economic stagnation.
ZBC News’ Wellington Makonese quotes Mangudya as saying:
The government has allowed for the use of foreign exchange alongside the local currency. The greatest challenge with full dollarisation is that we can’t have enough capacity to monetise all the bank balances for foreign exchange.
The greatest danger the economy would face is to be forced to mix virtual currency and foreign exchange and banks would need to separate the two currencies and trading would continue between the foreign exchange balances and the virtual forex balances. We need to love this country and not destroy the momentum and tame.
We have been there before in 2018. We will have parallel market of virtual money.
He added that behavioural issues have also contributed to macroeconomic instability.
Mangudya added that Zimbabwe has over US$2 billion to back the local currency, which means the economy can be stable. He added:
However, we see inflation continuing, which points to behavioural issues. We sympathise with the people for they have memories of 2009, but we cannot sacrifice growth for temporary stability.
Last month, the government put in place a raft of measures to stabilise the economy.
Some economists are sceptical that they will work and they urge the government to redollarise.