Minister Mthuli Ncube Confirms Zimbabwe Now in Phase Three of De-Dollarisation Road Map

Minister Mthuli Ncube Confirms Zimbabwe Now in Phase Three of De-Dollarisation Road Map

Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube has confirmed that Zimbabwe is now in phase three of its de-dollarisation road map.

The stage focuses on entrenching stability under the ZiG as the country works towards a mono-currency system by 2030.

Also Read: Finance Minister Mthuli Ncube Calls For A 24-Hour Economy In Zimbabwe

ZiG Seen as Turning Point

Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said the introduction of the ZiG last year marked a decisive turning point after earlier efforts with the Zimbabwe dollar failed to hold.

“We carried on, and then we still could not stabilise the Zimbabwe dollar. We ended up replacing it with the ZiG, as you know. And by the time we introduced the ZiG, everything was in place. We had fiscal discipline; we had monetary discipline,” he said.

According to Prof Ncube, the country has now enjoyed a year of stability under ZiG, a foundation that sets the stage for phase three of the roadmap.

“I would like to say right now, we are really on phase three. Phase three being how do you engender stability further because we have been stable now for a year.”

Past Hurdles in the Road Map

Prof Ncube acknowledged that Zimbabwe’s early steps in de-dollarisation were weighed down by unstable fundamentals.

“You cannot de-dollarise if you do not have a domestic currency,” he said.

He explained that the reintroduction of the Zimbabwe dollar nearly four years ago was undermined by quasi-fiscal activities at the Reserve Bank of Zimbabwe (RBZ) and unchecked liquidity growth.

“We, at that stage, decided, look, let’s remove the sources of instability. So, we had the Treasury absorb some of the foreign loans that were sitting at the central bank, which were causing certain macroeconomic stresses. These are so-called quasi-fiscal activities.

“We also, as a fiscus, literally closed any borrowings from the Reserve Bank window, overdraft window, to make sure there is no excess growth in liquidity.”

Despite those measures, the Zimbabwe dollar could not achieve lasting stability, leading to the transition to ZiG.

Road to 2030 and Vision for the Economy

The country currently operates a multicurrency regime, dominated by the US dollar and ZiG, which is legally allowed until 2030. By then, authorities expect economic fundamentals to support a full return to a domestic mono-currency system.

Permanent Secretary in the Ministry of Finance, Economic Development and Investment Promotion, George Guvamatanga, stressed that the plan is already being implemented.

“We do have a very comprehensive de-dollarisation road map. As we speak, the ZiG which we are currently using was created as part of that road map. So, already we are in the de-dollarisation process and from the Government perspective, we are already implementing it. We are on course of achieving de-dollarisation.”

The roadmap, finalised in 2019, forms a key part of the National Development Strategy 2 (NDS2) and Vision 2030, which seeks to transform Zimbabwe into an upper middle-income economy.

“Zimbabwe needs a domestic mono-currency, like the ZiG, to regain control over its monetary policy, manage inflation and foster long-term economic planning,” said Prof Ncube.