A former Zimbabwean finance minister said de-dollarization could result in economic “disaster”.
Zimbabwe has applied to join the BRICS bank, where there is debate about moving away from the dollar.
At the August summit, BRICS leaders gave different statements regarding de-dollarization.
BRICS’ message about de-dollarization could become even more muddled if Zimbabwe joins the group’s bank. Tsvangirai Mukwazi/Associated Press
Zimbabwe wants to join a bank set up by the emerging nations group BRICS – but the de-dollarization debate has started even before the country’s application has been approved.
Zimbabwe’s former finance minister Tendai Biti has said there could be an economic “disaster” if the current administration of President Emmerson Mnangagwa decides to eliminate the dollar.
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“This move will be completely disastrous and employees and pensioners will have to bear the brunt of it,” he wrote.
He also said that Zimbabwe does not have the economic conditions to eliminate the dollar.
Biti’s comments add to the ongoing intense debate over de-dollarization, as Zimbabwe applies to join BRICS’ New Development Bank. The discussion has been fueled by fears that Washington is weaponizing the dollar-denominated global financial system against Russia over the Ukraine war.
The discussion has been so intense that during the recent summit in August there was even discussion about the possible creation of a common BRICS currency.
The meeting ended without any announcement regarding the common currency, and during the summit, leaders of the BRICS countries also made contradictory statements about de-dollarization.
The BRICS Bank is also embarking on its de-dollarization journey by extending loans in local member currencies.
Biti’s views on de-dollarization also reflect local concerns about Zimbabwe’s economy. Zimbabwe has been in an economic crisis for years, with inflation in July running at 101.3% compared to the same month last year.
Zimbabwe’s official currency is the Zimbabwean dollar, but John Mangudya, the country’s central bank governor, told Bloomberg in July that US dollars were used in 75% of all transactions in Zimbabwe.
Zimbabwe’s government banned the use of foreign currencies as legal tender in 2019, the BBC reported. Mnangagwa said at the time that the country’s economy “is at the mercy of US dollar pricing, which is the root cause of inflation.”
However, the country was forced to reverse the ban in June 2022 to curb inflation.
As discussions about de-dollarization continue in emerging economies, including Zimbabwe, locals are concerned about its impact on their lives.
“The US dollar has given us our life back. We can’t live without it,” Lovemore Mutenha, a liquor store owner in Zimbabwe, told the Associated Press in August. “How does one budget with a Zimbabwean dollar that is always changing in value? It is not stable, and we have been burned before.”
Representatives for Biti, Zimbabwe’s central bank, and the BRICS New Development Bank did not immediately respond to Insider’s requests for comment.
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Source: www.bing.com
