Abstract. This paper examines the impact of dollarization on the performance of the Zimbabwean economy from to using an interrupted time-series. The study investigated the effects of dollarisation on economic growth in Zimbabwe from Q to Q The variables included are gross. Despite this Zimbabwe is viewed as a dollarised economy given that have occurred and the effect that would have had on the Government.

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Dollarisqtion the introduction of the dollar inflation has remained in single digit figures, and was even negative at the beginning of For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ngwenya, a lecturer at Solusi University describes as seigniorage. The effects discussed show that dollarisation is not a policy that should be used in isolation to spur much needed economic growth. The art of the good immediate economic handling is to be pending of the immediate and most remote evils, to try to be aware of what can happen in the immediate future immediate.

Dollarisation in Zimbabwe: Cause and effect

However, the response of the employment rate was independent of the dollarization and may be attributed to other factors such as Economic Structural Adjustment Programme ESAP inthe global economic crisis in and the absence of reliable data. The industries and the businesses also adopted this measurement as protection. Due to the shortage of cash, this method yielded the best exchange rate through interbank transfers.

When requesting a correction, please mention this item’s handle: But the predicaments are not only for entrepreneurs. The last rate was the official pegged rate, which was unavailable to the public businesses and individuals.

Due to the hyperinflation, savings were wiped oof. Due to the severity of the crisis, Zimbabwe has no comparable statistical neighbour but it is clear that its growth is still lagging in comparison to other countries in the region. Despite the crises faced by the US and the fluctuation of the US dollar, the currency is still widely accepted and used the world over and has thus survived the crises its economy has failed to survive.


Issues of the Journal. A system that has given transparency. This would have been ideal but, as discussed below, lack of foreign currency initially stopped local businesses from being competitive even in the domestic markets due to lack of access to foreign currency and credit.

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You might also like More from author. Any of these words. This CAI paper analyses dollarisation in Zimbabwe. A peculiar phenomenon happened in March of Zimbabwe is essentially operating a multiple currency system and recently the then Acting RBZ Governor, Dr Charity Dliwayo announced the adoption of more currencies in the economy. In Zim the dollarization process also has meant a certain change in the behavior of the political class regarding the topic of the budget.

Cash shortages ensued as a result of the inability to keep up with the inflation rate and lack of money to continue printing more bearer cheques. Other drawbacks to dollarization became apparent during its implementation: The constant complaint was that the prices of the inputs and capital assets increased daily and that the clients of the industries delayed the payment or let cancel their debts.

At the start of the 21st century, following the two incidents described above, inflation was high in Zimbabwe; the Government was operating with a large deficit. The elimination of foreign exchange risk has been particularly useful by reducing capital flight which has meant more money is kept in the country legitimately and can be used to spur economic growth. In October about 10, Zimbabwean troops were deployed to the Congo by the Government. This does no favours for the economy as it normally means that profits made by these foreign businesses are not retained in Zimbabwe as deposits or through re-investment to improve products so they do not contribute to growing the economy.

I tried calling the immigration department in Harare to give me statistics but unfortunately they kept referring me from office to another. This was against a backdrop of ever-dwindling revenue, inflation increasing at alarming levels year on year, and savings which could have been used for recovery being wiped away. When capable farmers were driven off their farms through the Fast Track Land Reform Programme FTLRP and replaced with farmers the majority of whom lacked expertise and equipment, revenue from these activities fell by a large percentage.


Businesses were better able to plan because there was more predictability of key indicators. Jul 5, 16, See general information about how to correct material in RePEc.


To access earlier articles, click Advanced Search and set an earlier date range. The January 31, unemployment was 90 percent of the economically active population PEA. Because the Government did not enter into a formal agreement with the US to officially use the US dollar as stated in the budget, the country had to start its implementation of dollarisation from the stocks already in circulation and in foreign currency accounts.

John Edward King, In fact, the decision to adopt that model was a political measurement. Prev Post Objects found in new MH search zone. Subscriptions are available via the Creamer Media Store. Advertise Advertising on Polity.

Investigating the Impact of Dollarisation on Economic Growth – A Case of Zimbabwe

The government continues to heavily rely on borrowing collarisation finance its expenditures. Other Zimbabwf Media Products include: However, months later, in March ofthe newly instated Finance Minister, Tendai Biti, announced that the Zimbabwe dollar would be suspended indefinitely. This paper examines the impact of dollarization on the performance of the Zimbabwean economy from to using an interrupted time-series analysis. Sign up for our FREE daily email newsletter.

The control of inflation was key for these activities. Brace for Zimdollar return: On Mar 28, 28, 1. Definitively, it was a time of instability for the productive sector.