Zimbabwe withdraws useless Rand, makes US dollar legal tender

Harare: The Zimbabwe government has decided to withdraw the country's currency from circulation for at least a year and use other hard currencies. The South African Rand will be the official "currency of reference".

The Zimbabwean dollar had gradually become worthless, with 20 trillion Zimbabwean dollars required to purchase one US dollar in January.

Economic planning minister Elton Mangoma was quoted in the state-controlled Sunday Mail newspaper as saying the Zimbabwe dollar "will be out at least for a year.'' The dollar's value crashed mainly because of the policies of the former regime of president Robert Mugabe to print huge volumes of cash in order to keep up with state spending.

Inflation had to be measured in percentage points with 15 zeroes.

"We resolved there will be no immediate plans to introduce the money because there is nothing to support its value," Mangoma said.

By late January the government adopted international hard currencies, mostly the United States dollar and the South African Rand, as legal tender alongside the local currency.

"Our focus is to ensure that we first have a vibrant industry," Mangoma said. "We must ensure that the industry can hold the currency and enable it to trade with other currencies. If we try to reintroduce the local currency now, it will face the same fate of being wiped out of its value within weeks."

The new power-sharing coalition government of Mugabe's ZANU(PF) party and prime minister Morgan Tsvangirai's Movement for Democratic Change, inaugurated in mid-February, has levied all taxes, duties and state services in US dollar terms even as it adopted the Rand as its official "currency of reference".

It may be mentioned that the new coalition government has inherited an economy that was once one of the leading economies in Africa. Policies of the 85-year-old Robert Mugabe's government have seen the decimation of the country's agricultural industry, previously the breadbasket of Africa.

The government has sought international aid to the tune of $8.5 billion in order to reconstruct the economy. This has been refused by Western donors who claim that security and judicial organs of the government, still controlled by Mugabe's party, are continuing with human rights abuses.