No light at the end of the tunnel for Zim dollar

By Vimbai Kamoyo

The Zimbabwe dollar continues to slide making the cost of living unbearable to most people particularly those earning in local currency, The Business Connect reports.

This week saw further hemorrhaging of the country’s currency by about 20 percent thereby pushing the prices higher.

The Zimbabwe dollar fell from one US dollar equivalent to 16,000 Zim dollars to 20 thousand against the same unit.

It has been the same story of losing value since October 2018 when Finance Minister Mthuli Ncube introduced then new policies to address what he said were skewed policies but it ended disastrously.

Two weeks ago Minister Ncube said the government was considering backing the local currency with gold to make it formidable and stable.

“This is a quest for currency stability. What has emerged over the years is the U.S. [dollar] being the most dominant.

“Going forward, we want to make sure that the growth we have achieved so far — which is very strong — is maintained and even increased. We can only do that if we have further stability in the domestic currency. … And the way to do that is perhaps to link the exchange rate to some hard asset such as gold,” he said.

Economists and businesses alike have in the past advised the government to maintain fiscal discipline which they said its absence has been the cause of the currency’s instability.

“We need to ensure fiscal sustainability through ensuring there is fiscal discipline, fiscal consolidation, restructuring public spending with a view of eliminating waste and non-productive spending.

The country has been losing money through subsidizing loss-making parastatals and entities,” said Prosper Chitambara, a senior economist with the Labour and Economic Development Research Institute of Zimbabwe

Inflation Rate in Zimbabwe increased to 34.80 percent in January from 26.50 percent in December of 2023. Inflation Rate in Zimbabwe averaged 42.60 percent from 2009 until 2024, reaching an all-time high of 785.55 percent in May of 2020 and a record low of -7.50 percent in December 2009, according to data released by the Zimbabwe National Statistics Agency (ZIMSTAT).