Zimbabwe bank chief says dollarisation is the easy way out but the wrong way

The Reserve Bank of Zimbabwe governor John Mangudya yesterday said dollarisation was the easy way out for Zimbabwe but it was the wrong way because Zimbabwe has no capacity to re-dollarise and will just become a supermarket economy.

According to the national news agency, New Ziana, Mangudya told the Parliamentary Portfolio Committee on Budget and Finance that he felt the pain that Zimbabweans were going through that was why the government was seeking a way out.

Zimbabwe has been experience rising inflation and skyrocketing prices over the past six months with some economists predicting that the local currency will soon collapse.

It has hiked interest rates from the beginning of this month and will be introducing gold coins in two weeks to shore up the local currency and provide an alternative store of value.

“We do feel the pain of this economy and because we feel the pain of this economy that is why we are doing all we think is necessary for this economy to recover,” he said.

He added: “This economy has no capacity to fully dollarise. The preference might be there, which is emotional. I feel the emotion but the capacity to re-dollarise this economy is not there….

“Zimbabwe will become a supermarket economy. We have been there before and that journey is a painful journey which as a governor of the Central Bank I will not propose to the August House. It is an easy way out, but the wrong way out.”

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