Zimbabwe to introduce new currency in the next 12 months, as dollar shortage worsens

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Zimbabwe’s Finance Minister, Mthuli Ncube said the country will introduce a new currency in the next 12 months to address the dollar shortage that has plunged the financial system into disarray and forced businesses to close.

The southern African nation has suffered acute shortages of imported goods in the past two months, including fuel whose price was increased by 150 percent. Zimbabwe abandoned its own currency in 2009 after it was wrecked by hyperinflation and adopted the greenback and other currencies, such as sterling and the South African rand.

There is not enough hard currency in the country to back up the $10 billion of electronic funds trapped in local bank accounts, a situation which has prompted demands from businesses and civil servants for cash which can be deposited and used to make payments.

To address this issue, Ncube revealed that a new local currency would be introduced in less than 12 months. He said “on the issue of raising enough foreign currency to introduce the new currency, we are on our way already, give us months, not years”.

The Central Bank’s data shows that the country’s foreign reserves now provide less than two weeks cover for imports. The government has previously said it would only consider launching a new currency if it had at least six months of reserves.

Locals are haunted by memories of the Zimbabwean dollar, which became worthless as inflation spiralled to reach 500 billion percent in 2008, the highest rate in the world for a country not at war, wiping out pensions and savings.

President Emmerson Mnangagwa is under pressure to revive the economy but dollar shortages are undermining efforts to win back foreign investors sidelined under his predecessor Robert Mugabe.

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