Zimbabwe Business Lobby Urges Switch to Rand as Primary Currency

South African Trade and Industry Minister Rob Davies

HARARE – The Confederation of Zimbabwe Industries, which represents most large industries in the country, said the government should adopt the South African rand as its “reference currency” instead of the U.S. dollar.

The chamber said that the country’s unique “multi-currency system” should be maintained, but that financial reporting should be done in rand, according to a statement handed to reporters ahead of national budget negotiations this week. South Africa is Zimbabwe’s neighbor and biggest trading partner.

“We suggest the minister of finance starts presenting his budget in rand instead of dollars,” the CZI said in proposals it will present to the finance ministry.

Zimbabwe abandoned its own currency in 2009 to end hyperinflation and uses mainly U.S. dollars, though South African rands, euros, British pounds and several other currencies are legal tender. A shortage of foreign exchange after a collapse in exports has caused a liquidity crisis that’s forced the government to pay its workers late. Last week, President Robert Mugabe authorized the introduction of dollar-backed bond notes to ease a shortage of the U.S. currency.

The CZI said it’s “satisfied” that the finance ministry and central bank have put in place sufficient safeguards to ensure that the bond notes won’t be misused.

Finance Minister Patrick Chinamasa will present the country’s 2017 budget late November or early December, Finance Secretary Willard Manungo said last week.

In an interview with Zimbabwe’s state-controlled Sunday Mail, South African Trade and Industry Minister Rob Davies said South Africa is unlikely to lobby for Zimbabwe to join a rand monetary union.

“It’s not anything that we, particularly as the government of South Africa, are pushing for,” he said. “It’s a sovereign decision for the government of Zimbabwe.” – Bloomberg

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