IMMEDIATE past deputy Finance minister Clemence Chiduwa came face-to-face with the reality surrounding waning confidence in the domestic currency after Zimbabweans asked Treasury to present the forthcoming budget in United States dollars instead of the local currency.
Desperate to rescue the domestic currency from an inflation-induced collapse, the authorities in Zimbabwe legalised the use of hard currency alongside the Zimbabwe dollar to stabilise the economy.
After weeks of speculation over the sole use of the local dollar, President Emmerson Mnangagwa announced that the multi-currency system would be extended to 2030 despite growing murmurs within his party over the use of foreign currency.
In the run-up to the 23 and 24 August general elections, Mnangagwa had hinted that his government was ready to return the local dollar as the sole legal tender.
Chiduwa, now chairperson of the parliamentary portfolio committee on Budget, Finance and Investment Promotion, has in the past defended the use the local currency despite it becoming increasingly worthless.
Official statistics from ZimStat show that over 75% of domestic transactions are now being carried out in hard currency.
To reverse this trend, Treasury has ordered government departments to charge services in local currency.
Despite this move, some departments such as the passport office are allowed to rake in US dollars.
“Participants noted with concern the loss in value of the National Budget due to galloping inflation given the budget is denominated in Zimbabwe dollars ($ZWL),” Chiduwa said after the public consultations conducted by the portfolio committee on Budget, Finance and Investment Promotion.
“Participants recommended that the 2024 National Budget be indexed in United States dollar and funds be disbursed to government departments at the prevailing rate so as to cushion government departments and other budget entities.”
Finance minister Mthuli Ncube is later this month expected to present the National Budget in Parliament.
Section 13 (2) of the constitution provides that people must be involved in the formulation and implementation of development plans and programmes that affect them.
Section 28(5) of the Public Finance Management Act [Chapter 22:19] mandates the minister of Finance, “through the appropriate portfolio committee of Parliament seek the views of Parliament in the preparation and formulation of the annual budget, for which purpose the appropriate portfolio committee shall conduct public hearings to elicit the opinions of as many stakeholders in the national budget as possible.”
During his tenure as deputy Finance minister, Chiduwa said the government had no plans to dump the free-falling Zimbabwe dollar, warning that the authorities would instead ramp up surveillance and penalise businesses using the parallel market rate.
“We cannot run a country without the monetary policy Act. So, for us in terms of where we are going with regards to the use of the Zimbabwe dollar, we cannot run a country with a currency that is not ours,” Chiduwa said, responding to questions in Parliament.
“Selling in foreign currency according to the dual system that we have at the moment is legal. We said in cases where a product is being sold in foreign currency there should be a display to show the equivalent in Zimbabwe dollars. That is the position.”
In 2009, Zimbabwe presented its National Budget in United States dollars after unprecedented inflation which officially reached 231 million percent wiped out the value of the local currency.