Zimbabwe to start phasing out use of US dollars at the end of 2022

(iStock)
(iStock)

Zimbabwe will phase out the use of foreign currency such as US dollars for the payment of local transactions at the end of 2022, according to a currency roadmap released on Wednesday.

The move falls under measures put in place to support Zimbabwe's five-year de-dollarisation strategy up leading up to the year 2024, seen by Fin24.

The southern African country recently reintroduced the use of foreign currency for local transactions, barely a year after outlawing its use in favour of the Zimbabwe dollar.

The decision to allow the use of foreign currency for local transactions, despite the earlier ban, was meant to ease the impact of the Covid-19 pandemic that has ravaged economies across the globe.

While for the remainder of this year and the following two years till 2022, institutions and individuals will be allowed to pay for goods and services in local Zimbabwe currency or foreign currency. 

In 2023, all goods and services in Zimbabwe will be "chargeable in local currency and payable in local currency using free funds" reads the strategy.

Meanwhile, payment of salaries in foreign currency will be scaled back, except for expatriates or NGOs, where it will still be allowed.

Currently, payment of salaries in foreign currency by local companies to local employees can be up to 50% at the discretion of the employer, but this will be reduced to 40% in 2021, 30% in 2022, 20% in 2023 and up to 10% in 2024.

Selected fuel dealers will be allowed to sell fuel in forex under the Direct Import Scheme, which specifies different regulations applying to fuel sales using forex. 

In another major policy move, Zimbabwe plans to gradually reduce exporters' retention thresholds "to build national forex reserves". Previously, retention thresholds had been criticised as too high, where exporters were paying up to 45% in fees to the Reserve Bank of Zimbabwe in exchange for local currency, sparking calls to allow them to retain foreign currency instead. 

ZAR/USD
17.17
(-0.96)
ZAR/GBP
22.47
(-0.79)
ZAR/EUR
20.22
(-0.84)
ZAR/AUD
12.24
(-0.65)
ZAR/JPY
0.16
(-0.90)
Gold
1975.66
(-0.27)
Silver
24.30
(-0.46)
Platinum
919.76
(+2.03)
Brent Crude
43.61
(0.00)
Palladium
2082.00
(+1.21)
All Share
55829.40
(+0.19)
Top 40
51571.71
(+0.40)
Financial 15
9805.08
(-3.46)
Industrial 25
74738.74
(+0.31)
Resource 10
56585.24
(+1.85)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 817 votes
It depends on how the funds are used.
74% - 5406 votes
No. We should have gotten the loan elsewhere.
15% - 1080 votes
Vote