Harare – The Zimbabwean government has announced its intention to formulate a detailed and transparent strategy for gradually phasing out the use of the United States (US) dollar to safeguard its economy and alleviate citizen hardship.
The original plan to cease the use of the US dollar and other foreign currencies by 2025 has been postponed to 2030, as announced by President Emmerson Mnangagwa. This adjustment comes as these currencies are currently in circulation alongside Zimbabwe’s local currency.
Following a decade-long period of reliance on the US dollar, Zimbabwe reintroduced its local currency in 2019. However, the currency has struggled to retain its value, prompting businesses to price goods and services exclusively in US dollars as a protective measure. In response, banks have halted US dollar loans to minimize financial risk.
Deputy Finance Minister Kudakwashe David Mnangagwa conveyed to lawmakers the government’s dedication to a thought-out transition from dollarization, emphasizing the role of stakeholder consultations in shaping the strategy. He stressed:
“The path to de-dollarisation is a process, not an event. We are committed to a roadmap that is both methodical and gradual.”
The government’s approach includes several initiatives as part of its de-dollarization plan. A comprehensive roadmap will be shared with the public following extensive stakeholder engagement, though a specific timeline has not been set.
Mnangagwa, son of the President, reassured that the transition to a singular currency system will be gradual. He acknowledged the recent stability in exchange rates and prices, attributing it to effective Treasury policies aimed at preventing abrupt fluctuations and inflation.
However, he recognized the susceptibility of the Zimbabwean (Zim) dollar to destabilizing factors, particularly during bonus season, when civil servants’ salaries are often targeted by economic opportunists.
Zimbabwe resorted to the US dollar in 2009 amidst a local currency collapse due to hyperinflation. Efforts to revert exclusively to the Zim dollar have stirred market concerns and affected the stability of exchange rates.