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Abstract. This paper examines the impact of dollarization on the performance of the Zimbabwean economy from to using an interrupted time-series. The study investigated the effects of dollarisation on economic growth in Zimbabwe from Q to Q The variables included are gross. Despite this Zimbabwe is viewed as a dollarised economy given that have occurred and the effect that would have had on the Government.

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The picture is not entirely bleak, however. The art of the good immediate economic zimbabwwe is to be pending of the immediate and most remote evils, to try to be aware of what can happen in the immediate future immediate. Of course, since dollarization began a sizable number of Zimbabweans have emigrated, many of them of working age; that is to say, within the PEA.

Despite the crises faced by dol,arisation US and the fluctuation of the US dollar, the currency is still widely accepted and used the world over and has thus survived the crises its economy has failed to survive.

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Due to the hyperinflation, savings were wiped out. RBZ rules out return of Zimbabwe Dollar. You might also like More from author. John Edward King, In his first budget as Finance Minister inTendai Biti noted that the Zimbabwean dollar had become a currency that was no longer accepted by the public due to the loss of the main functions of money through loss of confidence.

The subject is not only to leave dollarization. Despite this Zimbabwe is viewed as a dollarised economy given that the Government conducts all its business using the United States US dollar and it is the currency that has become predominant among the other currencies used in the country. At the start of the 21st century, following the two incidents described above, inflation was high in Zimbabwe; the Government was operating with a large deficit.

Sign up for our FREE daily email newsletter. The chief advantage to dollarization is that rampant inflation has been dramatically stabilized. Jobs are still scare and interest rates are still high. The January 31, unemployment was 90 percent of the economically active population PEA. In order to visualize the relation that dollarization has had on political policy, a small exercise of imagination is required.


However, the response of the employment rate was independent of the dollarization and may be attributed to other factors such as Economic Structural Adjustment Programme ESAP inthe global economic crisis in and the absence of reliable data.

Investigating the Impact of Dollarisation on Economic Growth – A Case of Zimbabwe

If CitEc recognized a reference but did not link effscts item in RePEc to it, you can help with this form. Cash shortages ensued as a result of the inability to keep up with the inflation rate and lack of money to continue printing more bearer cheques. This study examined the effects of dollarization on business in Zimbabwe focusing on economic indicators such as inflation rate, GDP, employment and ease of doing business during the period Change Sort Order Publication date latest first Publication date earliest first Headline alphabetical Author alphabetical.

Dollarisation is typically preceded by high inflation, followed by hyperinflation. It remains to be seen how much longer the economy will remain dollarised, but it is safe to say that for the foreseeable future this will remain the status quo. This contracted the supply side of the economy which further fuelled inflation. Any reverse of this situation and reintroduction of the Zimbabwean dollar would require that confidence in the Reserve Bank to perform its functions be restored.

Jun 29, 24, 3. Dollarisation is not the end for Zimbabwe, but rather a starting point that has brought about a certain level of stability which is needed to support the other changes that need to occur. Solutions and the timeline.

Dollarisation in Zimbabwe: Cause and effect

A system that has given transparency. In the last years there has been a strong increase in the internal debt approved in the budgets, although this has not happened to worry the legislative confines of the inclusive government.

Zimbabwe is essentially operating a multiple currency system and does not have an official agreement with the United States Federal Reserve to use its currency. The manager said that before dollarization he did not know with certainty how much he gained.

The last rate was the official pegged rate, which collarisation unavailable to the public businesses and individuals. If you are a registered author of this item, you may also want to check the “citations” tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation. Dr Ngwenya recommend increasing productivity and reducing costs of production so that industrial activity does not further decay.


The elimination of foreign exchange risk has been particularly useful by reducing capital flight which has meant more money is kept in the country legitimately and can be used to spur economic growth. Dollarization corrected problems with electricity, petroleum, telecommunications and interest effectw.

Investigating the Impact of Dollarisation on Economic Growth – A Case of Zimbabwe

Long-term economic planning is easier to do under a stable currency, and the hope is that the dollar will attract foreign investors who were previously reluctant to invest in Zim due to its economic and monetary weaknesses. The government continues to heavily rely on borrowing to finance its expenditures. These high interest rates once again hinder growth, and reduce the economic agents who are able to access loans.

Dr Ngwenya recognizes that now the economy is concentrated in the services, while the contribution of national production is reduced. However, a further hindrance to growth is that with the continued threats of nationalising any foreign owned businesses, 10 investors are wary of doing business in Zimbabwe.

An interrupted time-series analysis. To its own peril and more so that of the economy the RBZ chose quantitative easing. The series of events that caused dollarisation are examined, as are effectd effects this has had on the economy. Deepening Democracy through Access to Information.

Ngwenya, a lecturer at Solusi University describes as seigniorage. The discussion below outlines the effects of dollarisation on the Zimbabwean economy, namely the reduction of the competitiveness of local products in the international market on the negative side, and the reduction of capital flight and improved savings ability on the positive side.

How to cite this paper: Some analysts also agree that dollarization has created an atmosphere of stability for the public, soothed by their purchase capacity, that neutralizes the calls to mobilization that indigenous and labor leadership often make.

However, months later, in March ofthe then acting Finance Minister, Patrick Chinamasa announced that the Dollarisaion dollar would be suspended indefinitely.

A peculiar phenomenon happened in March of This allows to link your profile to this item. Those practices had an unhappy ending with dollarization.