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Citation Information

Type Thesis or Dissertation - MBA
Title Dollarisation and optimal dollarisation framework for Zimbabwe
Publication (Day/Month/Year) 2017
URL http://ir.uz.ac.zw/jspui/bitstream/10646/3275/1/Mushayi_Dollarisation_and_optimal_dedollarisation_fr​amework.pdf
The Zimbabwean economy was officially dollarised in March 2009. The Finance Act
of 2009 officially terminated the Zimbabwe dollar as an official transacting currency
in Zimbabwe. However, prior to this official dollarisation, most of the transaction were
already being conducted in foreign currencies. The adoption of dollarisation
facilitated the restoration of macroeconomic stability, as evidenced through taming
inflation, improvement in industry capacity utilisation and some improvement on
social services, among many other positive strides.
Given some modicum of economic stability realised since 2009, this research
therefore seeks to investigate whether the economy is now ready for the return of the
local currency and to develop an appropriate de-dollarisation framework. The route
to de-dollarisation being recommended requires that the government focuses on
addressing the conditions precedence to de-dollarisation. These preconditions were
identified as enhancing competiveness, institutional reforms, realignment of
government expenditures, improving current account performance, central bank
independence, political stability and resolving the country’s external debt position. An
evaluation of the above indicators since 2009, indicate that sufficient progress to
facilitate de-dollarisation has not yet been made. Once these are addressed, a
market based approach entailing the reintroduction of the Zimbabwe dollar in parallel
to the US dollar be adopted.

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