ZIMBABWE should only think of reintroducing the Zimdollar when its gross domestic product (GDP) rises to $45 billion with exports of about $15 billion and less than $3 billion of imports, former Finance minister Tendai Biti has said.
By Everson Mushava
Zimbabwe’s GDP is currently pegged at $10 billion, with imports of over $7 billion against exports of about $3 billion, creating a $4 billion trade deficit.
Government has proposed the introduction of bond notes to be supported by a $200 million Africa Export and Import Bank loan facility, which analysts have said was tantamount to reintroducing the long-abandoned local currency.
Biti told NewsDay Weekender on Thursday that the idea of introducing the Zimdollar at a time the manufacturing industry had collapsed and the country was experiencing the worst trade deficit now was “not only insane, but cruel”.
“That is a disaster. Firstly, the idea of introducing the Zimdollar is just insane, and this country was raped by its own currency.
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“The country should not think of reintroducing its own currency without at least exports of $15 billion,”Biti said
He added: “Exports right now are just below $3 billion. Our imports are around $7 billion, so we have a current account of at least $3 billion, we are in the negative, and our current account is more than 15% of GDP. How do you introduce the local currency under that circumstance? It will be attacked.”
Biti said if current imports were averaging $7 billion, the $200 million support to the bond notes would be a drop in the ocean.
He said the major challenge was that companies had collapsed and government should have used the $200 million to resuscitate industries and improve imports. “We should start focusing on supply side reform; this means kick-starting these closed companies,” Biti said.