Zimbabwe has delayed the end of its multi-currency system to 2030. This was announced on October 27, 2023, by President Emmerson Mnangagwa. The government had previously said that the multi-currency system would end in 2025.
The multi-currency system in Zimbabwe is a system in which multiple currencies are accepted as legal tender. The system was introduced in 2009 after the Zimbabwean dollar was abandoned due to hyperinflation. The US dollar is the most widely used currency in Zimbabwe, but other currencies, such as the South African rand and the British pound, are also accepted.
The multi-currency system has had a number of benefits for the Zimbabwean economy. It has helped to stabilize prices and to reduce inflation. It has also made it easier for businesses to trade and for consumers to purchase goods and services. It has helped to reduce the risk of hyperinflation.
While the multi-currency system offers many benefits to the Zimbabwean economy, it is does have its limitations. The multi-currency system is very complex and costly to manage for businesses and governments. Moreover, it make the financial system more vulnerable to instability and external shocks, especially if they are large swings in currency exchange rates. And lastly, it makes it more difficult to track financial transactions and can increase the risk of money laundering and other financial crimes.
In 2019, the Zimbabwean government announced that it would be reintroducing the Zimbabwean dollar as the sole legal tender in the country. However, the Zimbabwean dollar has rapidly lost value since then. In October 2023, the government announced that it would be extending the multi-currency system to 2030 in order to give the economy more time to recover and to stabilize the Zimbabwean dollar.
Economists point out that nearly 80% of local transactions are conducted in U.S. dollars due to diminishing confidence in the Zimbabwean dollar. Indeed, the largest independent asset manager in Zimbabwe earlier predicted that the U.S. dollar would continue to be the dominant currency in the country, even beyond the government’s December 2025 deadline to phase it out of the economy.
The multi-currency system has been extended for a few reasons. First, the Zimbabwean economy has been through a period of significant turmoil in recent years, including hyperinflation and a recession. The multi-currency system has helped to stabilize the economy, and the government believes that extending the system will give the economy more time to recover fully. The Zimbabwean government believes that extending the multi-currency system will help to stabilize the Zimbabwean dollar and make it more attractive to businesses and consumers. More importantly, President Emmerson Mnangagwa believes that the multi-currency system will promote trade and investment in Zimbabwe.
The decision to extend the multi-currency system is likely to be welcomed by businesses and consumers in Zimbabwe. It will provide certainty and stability in the economy, and it will make it easier for businesses to trade and for consumers to purchase goods and services. However, it remains to be seen how the system will evolve in the future and how it will impact the Zimbabwean economy in the long term.