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Vol 60 No 2

Published 25th January 2019


Zimbabwe

Turbulent beginnings

As protests against austerity grow, factions within the military and ruling party are vying for power and bludgeoning dissent

Everything hangs on the economy in 2019, but the outlook is dire. There are two semi-functional currencies apart from real US dollar notes: electronic 'US dollars' in local bank accounts, which are effectively worth less than cash US dollars, because they cannot be exchanged for cash US dollars; and local 'bond notes', a temporary cash currency introduced in 2016 to ease the US dollar shortage. Prices are charged differently according to the method of payment, in spite of the Ministry of Finance's insistence that a local dollar is equivalent to one US dollar. This misguided claim has a severe impact on the pricing of imported goods, particularly fuel, which is being imported using real US dollars and sold locally for electronic payment. The 2019 budget projects a $1.6 billion deficit even if the economy grows at the predicted 3.1%. This is the kind of challenge that will characterise the year ahead.

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