The temporary suspension of US$ was successful yesterday as the carbinet and parliament wholly supported the ministry of finance and economic development. Five days ago Mr Chinamasa proposed the introduction of local currency in the economy citing that the continued appreciation in value of US$ against other currencies especially of our most trading partners is stiffling economic growth. The continued appreciation of the us$ has made it difficult for local firms to compete regionally because of high cost of production.
The use of US$ have also resulted in closure of companies at an unacceptable rate,this is because most companies are being trapped in liquidity challenges hence no working capital for day to day operation of the business. The recent proposal by RBZ to pursue internal devaluation proved fruitless,for that reason the finance ministry advocated the introduction of local currency with immediate effect. The agreed date for the introduction of local currency is 23 december 2015. The interim name for the local currency will be bond notes and bond coins.
This move will enable the RBZ to resume its duty of controlling the circulation of money in the economy and also implementing a sound monetary policy framework. Asked why the introduction of local currency whilist there was an improved revenue generation of 47% ,the minister argued that it was in figures but the money is not physically there. The new currency will have the US$ equivalent value. This move will ease the shortage of cash in the economy. Banks will start receiving the local currency on 21 December 2015.
The civil servants will start receiving their salaries on Monday in local denominated currency.Their bonuses will be paid as scheduled earlier on starting with uniformed forces receiving their bonuses Monday 21 December,education 4 January and the rest of civil servants 15 January. The use of local currency will make local products cheaper against foreign goods and this will stimulate economic growth.