Fear of self-dollarisation of the economy and the plight of government workers who could no longer afford to buy goods and services forced the Zimbabwean government to abolish the long used multi-currency regime, finance minister Mthuli Ncube said on Monday.
Speaking after gazetting the new law that abolished the multi-currency and made the local currency the only legal tender, Ncube said the multi-currency system had became untenable.
“What was happening is that the market was self US dollarising.
“It was uncontrollable and we felt that we needed to bring the situation under control,” said Ncube.
He said the plight of government workers including teachers, whom he met with last week, forced government to move fast.
Demand for dollars
He said workers were now finding it difficult to buy goods and services, with even hospitals demanding US dollars.
“Quite clearly it became an untenable situation and it became necessary for government to move a lot faster and introduce a mono currency regime in favour of a domestic currency.
“This marks the end of the multi-currency,” said Ncube in a video broadcast through the ministry of communication.
He said the move was beginning to restore full monetary policy and would give Zimbabwe’s central bank “flexibility”.
“We should expect a package or a raft of measures from the central bank to support the value of the currency.
“This should also include the introduction of interest rate policy and a monetary policy committee.”