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Africa

Multiple foreign currencies permitted to boost economy

Video by Marian HENBEST

Latest update : 2009-01-30

Zimbabwe's acting finance minister Patrick Chinamasa announced that his government would allow multiple foreign currencies to enter circulation, including the euro and the US dollar, to aid its flagging economy.

AFP -  Zimbabwe on Thursday decided to allow the use of at least five foreign currencies, including the euro and the US dollar, to prop up the ailing economy as it announced a 1.9-billion-US-dollar budget for 2009.
   
"In line with the prevailing practices by the general public, government is therefore allowing the use of multiple foreign currencies for business transactions alongside the Zimbabwean dollar," said acting finance minister Patrick Chinamasa.
   
"These currencies include the South African rand, the United States dollar, Botswana pula, euro, pound sterling among others," he told parliament in the budget speech.
   
The 66,500,000,000,000,000,000-Zimbabwean dollar (1.5-billion-euro) budget was presented in both foreign and local currency, with parliament expected to debate the proposal next week.
   
"I ... propose a total 2009 budget of 66.5 quintillion (1.9 billion US dollars), comprising 50.75 quintillion recurrent expenditure and 15.75 quintillion capital expenditure," Chinamasa said.
   
The provision includes 200 million US dollars of resources already committed by partners and earmarked for specific programmes, he said.
   
Fees at state institutions such as hospitals and tertiary education facilities were listed in US dollars, while the country's power, water and state-run fuel utilities will also charge money in forex.
   
A hospital visit for an adult will cost eight US dollars, a term at medicine school will cost 1,800 US dollars and a kilowatt of power is now charged at 98 US cents.
   
"Given that all transactions can now legally be undertaken in either local or foreign currency, government is simplifying the licensing requirements and arrangements to transact in foreign currency," Chinamasa said.
   
Previously, only licensed businesses could trade in forex at a fee of 20,000 US dollars to buy basic goods.
   
Civil servants will be paid in local currency but will be given a monthly forex allowance, the proposed budget stated.
   
The country's world-record hyperinflationary environment -- last officially set at 231 million percent -- has led the central bank to slash 13 zeros from the local unit over the past three years in a bid to make the currency more manageable.
   
Earlier this month, the bank indicated it would introduce a 100 trillion dollar note, in its latest attempt to keep pace with conditions that has left its once-vibrant economy in tatters.
   
 

Date created : 2009-01-29

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