Zimbabwe To Allow Withdrawal Of US Dollars From Foreign Currency Accounts

The government in Zimbabwe has said it will allow citizens of the country to withdraw amounts up to $1,000 from foreign currency accounts, in a move to help while the country shifts to new currency to fight rampant hyperinflation and unemployment.

Reuters is reporting that the move comes after 10 years of dollarization. The fear was that the central bank could potentially go into and take funds from foreign currency accounts, the way former ruler Robert Mugabe did in 2008.

The Governor of the Central Bank John Mangudya said there is a total of $1.3 billion in non-Zimbabwe currency in the bank’s accounts. As he told a committee in the country’s parliament, people could take out $1,000 a day from foreign currency accounts without penalty, but organizations and people would need to talk to the banks themselves if they needed physical dollars.

The country is embroiled in financial and infrastructure crises, as shortages of fuel and electricity problems have caused outages lasting up to 15 hours. A drought in the country also severely affected crops.

President Emmerson Mnangagwa replaced Mugabe after a coup in November of 2017. He is struggling to turn around the country’s economy, which has been severely hurt by hyperinflation and a long line of failed economic programs. Mnangagwa agreed in May to a program with the International Monetary Fund (IMF) to aid the country in moving forward with new economic programs.

The government made a major move last week when it gave its interim currency, the RTGS dollar, a new name: the Zimbabwe dollar. It was also named the only legal tender in the country, ending 10 years of dollarization. The president said he would start by printing 400 million Zimbabwe dollars, and that he would slowly introduce them into circulation to fill the void left by ending dollarization.

About 80 percent of Zimbabweans are paid with RTGS dollars, but many other things are priced in other countries’ currencies. Inflation in the country was near 100 percent last month, and unemployment is reaching catastrophic levels. Many in the country are afraid that moving away from dollarization will cause price surges.