HARARE, Sept. 24 (Xinhua) -- Zimbabwe can only bring back the Zimbabwe Dollar, after addressing critical issues that led to its abandonment, chief among them the need to restore productivity and increase trade and investment, economists here have said.
Reserve Bank of Zimbabwe Governor Gideon Gono has made a passionate plea for debate on the need to bring back the Zimbabwe Dollar following a choking of liquidity crunch on the market.
This has sparked intense debate over various monetary reforms that are aimed at easing the liquidity challenges and creating space for lender-of-last-resort and injection of economic stimulus.
Speaking at a discussion forum organized by the Zimbabwe Economic Society, Marko Kwaramba, an economist from the University of Zimbabwe (UZ), said Zimbabwe needs monetary reforms before bringing back the local currency, The Herald reported on Thursday.
"We should be concerned about central bank reforms in terms of international financial integration before bringing back of our local currency," he said.
He added that Zimbabwe should concentrate its efforts on joining the Rand Monetary Union.
Some of the reforms under debate amongst stakeholders include Currency Board, a crawling peg on a Basket of Currencies and reintroduction of Zimbabwean Dollar.
"Only until Government is able to generate adequate revenues to meet its expenditures should we go back to the Zimbabwe dollar," Kwaramba added.
Speaking at the same occasion, Ronald Chifamba, another economist from UZ, said the government needs to build confidence to use own currency and address, first, the issues that led to the fall of the local currency.
"We need to look back and start dealing with what led to the situation that we are in today. People no longer trusted our currency, that has to be dealt with. There has to be assurance of trust before the re-introduction," he said.
The government adopted the current multi-currency policy when people had already informally started using foreign currency in transacting.
Chifamba concurred with Kwaramba on the need to restore production and increase investment as well as joining the Rand Monetary Union.
Given that the government is struggling to meet its expenditure requirements, economic agents do not have confidence that it will be able to pull through without recourse to international borrowings which is the case with a number of governments in Africa.
A successful resurrection of the Zimbabwe Dollar is only dependant on the reliable financial assistance by the international community which in turn is a function of the sustainability of the Inclusive Government.
However, the cash shortage has negatively affected the productive sectors of the economy and the general populace especially people in the rural areas.
In fact when a country gives up the option to print its own money, it loses its ability to directly influence its economy, including, among others, its right to administer monetary policy and any form of exchange rate regime.
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