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Finance minister Mthuli Ncube says adopting US dollar alone is suicidal

By Staff Reporter | Nehanda Politics |

Finance minister Mthuli Ncube said it would be suicidal for Zimbabwe to adopt the United States dollar alone as the official currency because this would fuel inflation levels and would do more harm to the already struggling economy.

Finance Minister Mthuli Ncube
Finance Minister Mthuli Ncube

Ncube was responding to a report by the Parliamentary Portfolio Committee on Budget and Finance issued yesterday in Victoria Falls at the 2022 pre-budget seminar which urged the government to adopt the United States dollar as goods and services in the country were mainly being sold in that currency.

“Members of the public suggested that the government should denominate the 2022 National Budget in United States dollars,” the Budget and Finance committee report read.

But Ncube said the last time Zimbabwe had the US dollar as currency, inflation was high. Government is trying to tackle price and exchange rate instability that are inflaming inflationary pressures on the economy.

“We cannot adopt the United States dollar alone as the official currency, you were there before and there were long queues at the banks, huge foreign currency deficits and you had deflation. That was because of the US dollar. It is not a good idea and it will be suicidal to do so.

“What has happened is after we introduced the local currency, the industry is picking. It’s about stabilising the currency. We are reforming the country, running the country under a basically dual currency regime and of course other smaller currencies,” he said.

The Budget and Finance committee also said the public had expressed concern that the parallel market rate is going up at unprecedented rates, affecting the pricing of goods and services.

It proposed that the government should consider reverting to the multi-currency system, since most service providers prefer trading in forex.

“They expressed concern that the current tax system is complex and not user friendly for new entrants making it difficult to collect more revenue,” the committee said. Nehanda Radio