US dollar becomes the darling of the economy
April 9, 2009
By Ethel Hazelhurst
Although Zimbabwe's local currency is still legal tender, transactions usually take place in other currencies, according to Zimbabwe economist John Robertson.
The Zimbabwe dollar's demise came after the government's February decision to allow foreign currencies to be freely used and the announcement last month that the rand would serve as Zimbabwe's "reference currency".
Robertson said the US dollar was probably most widely used, especially in Harare, but the rand was accepted everywhere.
The country has little access to foreign currency, however, because its export capacity has been damaged and its failure to repay its debt has destroyed its standing as a borrower. In June 2003 the International Monetary Fund (IMF) suspended Zimbabwe's voting rights after it failed to make debt repayments. "Our last loan from the IMF was in 1998," said Robertson.
The Zimbabwe economy has been shrinking for eight years, since President Robert Mugabe supported a land grab programme starting in 2000. Formerly productive land fell into disuse and output from agriculture, the main source of export revenue, shrank sharply.
Limited reforms have improved prospects marginally. On Monday, Business Unity SA sent a delegation to Zimbabwe and announced it would host an investment conference.
Investors are taking their chances on an improvement in the economy. Bloomberg reported yesterday that Zimbabwe's share prices had rallied 66 percent since the stock exchange reopened one-and-a-half-months ago, after closing in November. - Ethel Hazelhurst
|
|
