Zimbabwe's former Finance Minister, Tendai Biti today in the morning pulled a shocker when he said that the Emmerson Mnangagwe-led government is going to introduce a new currency this week. The introduction of a new currency is expected to coincide with the presentation of the Monetary Policy statement by Finance Minister, Mthuli Ncube this week. On his Twitter account, Mr Biti said:
"The regime will this week introduce a new Zimbabwe currency not backed by any #reserves & without the context of structural reforms which a prerequisite of currency reform . That move is pure undiluted #insanity . An unbanked currency is just the #bond note by another name."
"There is no country in the world that has involuntarily dollarized that has ever succeeded in de -dollarizing. Zim will not be the 1st .Whilst a currency is about fundamentals ,ultimately the most important fundamental is confidence There is absolutely no trust in this regime."
"Considering the #harm and #damage inflicted on this economy by its Central Bank over the years to now , the question to be posed is, does Zimbabwe really need a Central Bank? In my submission, it can and will do without one."
Last week, Tendai Biti, who is opposition party, MDC Alliance deputy national chairman, urged the country to adopt the South African Rand as its currency.
Biti feels that this measure is just one of a string of measures that need to be implemented as a matter of urgency as Zimbabwe face a second period of hyper-inflation in a ten-year period.
A foreign-exchange shortage has helped drive the current economic crisis which has led to destabilizing anti-government protests across the country following a massive increase in petrol prices.
In 2009 Zimbabwe abandoned their own currency (the Zimbabwe Dollar) adopting a system that primarily made use of the US Dollar while also accepting the currency of their neighbours.
Biti has said that Zimbabwe joining Southern Africa’s so-called Common Monetary Area which currently comprises Namibia, Lesotho and the Kingdom of Eswatini (formerly known as Swaziland).
The former finance minister has backed the move to bring greater integration into the regional market for the struggling Zimbabwe economy.
“The advantage of joining a rand monetary union would be that it would foist some much-needed discipline on the Zimbabwean economy,” Biti said in an interview with Bloomberg in Johannesburg on Friday.
“It would also enhance regional integration” by giving manufacturers in the country access to 300 million consumers in southern Africa, compared with the 100,000 he estimates can still afford goods usually bought by the middle class in Zimbabwe, he said.
From 2009 until 2013 Biti served as finance minister in the country as part of a Government of National unity that saw cabinet positions split between the ruling Zanu PF party and the opposition Movement for Democratic Change.
Under a complicated financial system at present Zimbabwe’s central bank prints quasi-greenbacks termed bond notes and makes use of RTGS$ or Real Time Gross Settlement, a system of electronic funds transfer commonly used for large sum transfers in India.
The current system is complicated and has left Zimbabweans unsure of where they stand financially despite government assurances that all currencies are tethered to the US Dollar.
Biti has slammed the reckless spending of the Zanu PF government and described the current economic crisis as a miracle of failure.
“To have two hyperinflationary spells in a period of 10 years is a miracle of failure,” aid Biti.