(Ecofin Agency) - Almost a year after it suspended the use of foreign currencies, the government of Zimbabwe has now allowed citizens to carry out domestic transactions in US dollars to mitigate the impacts of the current covid-19 pandemic on the economy.
Despite this decision of stopping the use of foreign currencies which the government thought would boost the country’s economy, things were not going as planned. The local currency has gradually declined along with the foreign exchange reserves while inflation sharply rose, raising fears of a return to the period of hyperinflation that had affected the economy a decade ago.
According to authorities, the new reintroduction of the US dollar is a measure to minimize the destructive effects of the covid-19 pandemic on Zimbabwe's very fragile economy. As a reminder, the country has seven cases and reported one death, as of March 30. South Africa, which serves as a supply base for many Zimbabwean traders, has announced the deployment of a barrier at its border with Zimbabwe to reduce “irregular migration” to slow the spread of the virus.
