Zimbabwe bans US Dollars: What are the implications?

Country abolishes multi-currency regime

With effect from 24 July 2019, Zimbabweans will no longer be allowed to use foreign currencies when carrying out transactions in the country. The country has been using mostly USDs and Rands since 2009. With the news still filtering in about the reintroduction of the Zimbabwe Dollar (in the form of the RTGS and the bond), questions are being raised about the implications. What does it mean that Zimbabwe has abandoned the multi-currency regime? Here are some of the questions that are being raised about the decision;

Zimbabwe bans US Dollars
Zimbabwe bans US Dollars
  1. Will people be allowed to pay duty for car imports in RTGS? If the government does not allow this, then it would be hypocritical. If the bond has become the sole legal tender in Zimbabwe, then it should follow that people should be allowed to pay duty for car imports in RTGS.
  2. What happens to people who were being paid by their companies in forex? Platinum miners such as ZIMPLATS are cases in point. It’s more than likely that all companies will be forced to pay people in bonds. So to these people, welcome to the bandwagon.
  3. What happens to money that was already in FCA accounts? To be frank, when the issue of FCA accounts was introduced, people were rather skeptical about opening them! However, there was the reassurance that no one was ever going to lose their money. So, what’s going to happen to this money now? The Statutory Instrument that promulgates the reintroduction of the Zim Dollar talks about this issue and claims that this money will not be touched. However, this does not seem likely. If USDs have become illegal in the country, can you then go to your bank to withdraw money from your FCA account in USDs? Or are you going to be given your money in bonds at the prevailing Interbank Rate, which, by the way, is half of the prevailing black market rate?
  4. There were also mortgages that were being paid in forex. To be frank, most companies were still accepting bonds. But what will happen to companies that were selling in USDs?

Anyway, these and many more are some of the implications and questions from the reintroduction of the Zimbabwean Dollar. The ban on the use of the USDs in the country is likely to have far reaching implications on the country. What do you think? Is this the right way to go? Will it not lead to the reemergence of empty shelves?

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