Herald Reporter

THE multi-currency system adopted by the Government will remain in use for the next three years making an early return of the local currency doubtful, Finance Minister Tendai Biti has said.

The Zimbabwe dollar might not even return because Sadc would have a regional currency in use by then, Minister Biti said.

He told Senate on Tuesday that Cabinet had unanimously adopted the use of multiple currencies for the next three years.

He was responding to questions raised during debate on the Finance Bill.

"We have resolved unanimously to have the regime of the multiple currency for the next three years. Details to this will be contained in the macro-economic stabilisation programme to be released before the end of the year or early next year," said Minister Biti.

Soon after the formation of the inclusive Government, Zimbabwe embarked on a Short-Term Economic Recovery Programme meant to stabilise the economy, but this will soon be replaced by the medium-term economic plan.

Minister Biti said the finalisation of discussions on the common currency between countries in the Sadc and Common Market for East and Southern Africa regions also had a strong bearing on the return of the local currency.

"If Sadc and Comesa solve their problems on the customs union, then there would also be a single monetary union," he added.

Sadc and Comesa member countries have agreed to have a single currency as part of measures to boost regional integration and trade.

Zimbabwe adopted the use of multiple currencies, especially the US dollar, rand, pula and the pound in February this year to ease the effects of the hyperinflationary environment that affected the country, heavily eroding the local currency’s value.

The remarks by Minister Biti followed comments by Parliament’s Portfolio Committee on Budget and Investment Promotion, which had urged the minister to be clear on the use of the multi-currency system.

Committee chairperson and Hatfield Member of the House of Assembly Mr Tapiwa Mashakada told the House of Assembly that investors wanted to know Government’s position on the duration of the use of the multiple currencies in order for them to make informed decisions.

"We are of the opinion that to sustain economic recovery, there is need to provide a time horizon within which the multi-currency regime should continue so as to provide a predictable planning template for business in the medium to long term," said Mr Mashakada.

"We, therefore, propose that a timeframe of three to five years be cast to allow business production and investment decisions to be made with certainty. Given the current regional economic integration, where a monetary union is envisaged under both Comesa and Sadc, it may be prudent to adopt the rand as an anchor. That way, investment capital can begin to flow from South Africa and FDI

(foreign direct investment) in general," he said.

Reserve Bank of Zimbabwe Governor Dr Gideon Gono recently called for the return of the Zimbabwe dollar anchored on the value of gold and other minerals available.

Giving evidence before a portfolio committee on Environment and Natural Resources, Dr Gono proposed the setting up of a committee that would determine the value of gold and minerals before issuing a certificate to the central bank directing the amount of Zimbabwe dollar to be produced.

The central bank boss said re-introducing the Zimbabwe dollar would go a long way in mitigating the lives of ordinary rural peasants whom he said were finding it difficult to make a living owing to the elusive foreign currency.

Re-introducing the Zimbabwe dollar, said Dr Gono, would also alleviate the plight of change that had been experienced and he proposed that the central bank could even mint gold coins.

Dr Gono’s suggestion sparked a lively debate with some supporting him while others said the multiple currency system should remain in place until the economy recovers fully.

The record inflation levels that afflicted the country resulted in most basic commodities becoming out of reach for the ordinary person.

However, this changed following the introduction of the multiple currency system early this year.

Last year, Government had licensed some businesses to sell their goods in foreign currency, while others continued to trade in the Zimbabwe dollar but later introduced the multiple currency system for the entire economy.

The decline in the value of Zimbabwe’s currency has been largely attributed to the illegal sanctions imposed on the country by the US, British and their European counterparts.

However, the use of the foreign currency has greatly affected disadvantaged groups especially the rural folk who cannot readily access the hard currency.

During the debate, Minister Biti also attacked banks for the slow rate at which they were lending to investors and businesspeople saying this was impeding economic recovery.

The low returns on deposits have generally discouraged the culture of saving among individuals.

"Deposits are over US$1 billion, but the loan deposit ratio is currently at 50 percent and is largely being pushed by one bank (CBZ), while other traditional (big) banks like your Barclays, Stanbic and Standard Chartered are at 10 percent," he said.

"We are not happy with the mismatch between the lending rate and prime interest rate. The various charges are almost as if the banks are punishing you for depositing your money. We are thinking of using the powers vested in us to address this issue."

Most financial institutions are offering short-term loans that are incompatible with the country’s turnaround programme.

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