10 major causes of Zimbabwe’s financial crisis

Conclusion

Dollarization requires that the economy be opened to business without any hindrances. The supply of United States Dollars are from the following sources:

(1) official development assistance, which is not forthcoming because of the debt overhang,  and governance and human rights issues that have resulted in sanctions

(2) Balance of payments support from multi-lateral institutions which is not forthcoming

(3) Lines of  Credit which have dried up

(4) Exports, which are depressed because companies are operating below capacity and the proceeds are externalized 

(5) Foreign Direct Investment which is not coming because of Indigenization and policy inconsistency.

At the end of the day we can see that through its omissions and commissions,  government is culpable for the current cash shortages. MDC rejects any scapegotting or red herrings.

The re-introduction of the Zim dollar means that government now has access to the printing press where it can then create superficial credit in the economy through seigniorage revenue revenues, a process which stokes hyperinflation. We are back again to the days of vodoo economics and financial engineering – all to the detriment of the economy.

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