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Zimbabwe: Biti’s budget sees change for beer drinkers but not currency
Mugabe had promised reintroducing Zimbabwean dollar by end of year
Finance Minister Tendai Biti on Wednesday ruled out the re-introduction of the Zimbabwe dollar saying the multiple use of currencies would continue but had no kind words for beer drinkers.
Biti said the debate on the Zimbabwe dollar would start next year. “The use of multiple currencies has brought about stability on the economy therefore its use would continue until there is a sustainable growth of above 10 per cent. We cannot bring back our currency at this stage," he said.
He reiterated this position during his 2010 national budget presentation that was broadcast live on national television. This follows a declaration made by President Mugabe in the month of November this year that the Zimbabwe dollar, which was abandoned in March because of its worthlessness, will be back in circulation by year-end.
Zimbabwe is battling to reconstruct the economy that the government estimates contracted by nearly 50 percent from 2000-2008.
Harare abandoned its dollar seven months ago to curb a galloping inflation which forced thrice-daily price increases, rendering the local currency unusable.
But Mugabe said multiple foreign currencies that replaced the local dollar were unavailable to Zimbabweans, thereby spiking deep poverty. He said "We will be reintroducing our own currency by end of the year. People are failing to board buses. Some are using goats to pay as bus fares”.
Finance minister Biti, has long threatened to quit if forced to bring back the local dollar. There have been calls for a singe foreign currency to be adopted, whether the USA dollar or the South African rand.
The business community had lobbied for the adoption of the South African rand to replace a multi-hard currency monetary regimen. It said the multi-currency system is not sustainable as most businesses pay their workers in dollars but pay rand for most of their goods and materials - which have become more expensive in U.S. dollar terms as the rand has appreciated in recent months.
Biti doubled import taxes on beer from 20 to 40 per cent therefore increasing the prize of the commodity. He said beer is very cheap compared to other countries in the region.
The increase, which comes into effect from January next year, gives at least a month’s grace period. Zimbabwean imbibers have siad that it would have dampened the festive seasonal mood had the decision been applied with immediate effect.
This is the first full budget presentation by the fragile inclusive government, formed 10 months ago to try to end a decade-long political and economic crisis.