2015 – The Zimdollar is finally demonetised, with depositors getting US$5 for every 175 000 000 000 000 000 (that’s 175 quadrillion) Zimbabwe dollars held. Each 250 trillion Zimdollars gets $1.
2016 – RBZ governor John Mangudya announces he will launch a bond note, which he says would be at par with the US dollar. The bank calls it an export incentive, a desperate twist of PR meant to ease fears in an economy still traumatised by memories of 2008. It is months before the first notes appear.
2017 – Bond notes and US dollars start disappearing from the market. Government spending is rising, fuelling inflation. In September, consumers go panic buying after rumours of shortages. Prices rise foreign currency shortages deepen. Inflation, once again, is back on the march.
2018 – Despite a change of Government, there is no change in the culture of overspending. Treasury data shows Government spent $3.86 billion in the first half, $2.5 billion of this between April and June, against a target of $1.26 billion.
Although first half revenues of $2.5 billion exceeded the target by 14%, a staggering budget deficit of $1.35 billion was recorded in the period, 408% above a target of $266 million. Government had initially forecast a budget deficit of $700 million for the full year.
The huge deficit was caused mainly by unbudgeted, pre-election spending on farm inputs under the command agriculture scheme, amounting to $616 million. There is also spending on grain imports – $81 million, road maintenance – $225 million, and dam construction – $87 million, as well as $212 million injected into state enterprises.
New Finance Minister Mthuli Ncube, on the recommendation of banks, announces a plan to “ring fence” US dollar balances from local bond note and RTGS deposits. The markets see this as a signal that their local currency deposits are losing value, and there is widespread panic. The US dollar rate on the black market rises and prices shoot up in reaction.
Inflation in October rises to 20.85%, a new post-dollarisation record.- NewZwire
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