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Zimbabwe drops US dollar & relaunches own currency to revive economy

The spiraling economic meltdown in Zimbabwe has prompted the Central Bank to introduce a discounted currency. The government is trying to reverse chronic cash shortages that left people struggling to get hold of basic goods.

Under the new rules, Harare decided to abandon an unrealistic dollar peg for the country’s surrogate bond notes and electronic dollars, which were merged into a new currency called the RTGS dollar. It was adopted with a fixed exchange rate 1:1 parity policy on the surrogate bond note currency and the US dollar for a managed floating system.

The RTGS dollar derives its name from the country’s interbank online payment platform, Real Time Gross Settlement.

“There is nothing to stop Zimbabwe printing money with this new currency,” Jee-A van der Linde, an analyst at South Africa-based NKC African Economics told The Times daily. “The government has basically kicked the can down the road in recent years by trying to stimulate the economy through excessive spending,” he said.

Former finance minister and opposition politician Tendai Biti, who oversaw Zimbabwe’s adoption of the US dollar to curb hyperinflation 10 years ago, has slammed the new policy as “voodoo economics.”

“It is disaster, it is grand theft, it is voodoo economics,” Biti told the Financial Times. “There is no market confidence and there are no reserves,” he said, adding: “We are Zimbabweans, we have seen this before.”

Residents of Harare now have to wait outside banks for hours to withdraw a maximum of around $30 in surrogate money or collect remittances from relatives abroad.

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