Why Zimbabwe paid civil servants bonuses in United States dollars

The Reserve Bank of Zimbabwe governor John Mangudya says the country’s civil servants were paid bonuses in United States dollars to avoid a run on the local currency.

He said if they had been paid in local currency they were going to buy US dollars on the black market at any cost as the greenback is still considered a store of value and this would have pushed up the black market rate as well as prices.

The government said it set aside US$120 million for civil servants’ bonuses.

Asked if this was not going to put pressure on the private sector to pay their workers in US dollars and thus push the parallel market rate as employers bought US dollars on the black market, Mangudya said the private sector already had its own foreign currency.

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