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Zimbabwe Govt: USA Dollar, Other Currencies No Longer Legal Tender for Local Transactions

FILE: Zimbabweans compare the new note with the U.S. dollar note following the introduction of new notes by the Reserve Bank of Zimbabwe in Harare, Nov, 28, 2016.

The Zimbabwean government says the United States dollar, Botswana pula, British pound and other currencies are no longer legal tender in the country with immediate effect.

The announcement was made through a statutory instrument issued by Treasury, which noted that all local transactions will now be made in the Zimbabwe dollar, which includes the bond and RTGS dollar.

The Statutory Instrument 142 of 2019 gazetted today reads in part, “With effect from the 24th June 2019, the British pound, United States dollar, South Africa rand, Botswana Pula and any other foreign currency whatsoever shall no longer be legal tender alongside the Zimbabwe dollar in any transactions in Zimbabwe.”

The Statutory Instrument further stresses that the current bond notes and RTGS dollars are at par with the Zimbabwe dollar.

“For the avoidance of doubt it is declared that references to the Zimbabwe dollar are coterminous with references to the following and to no other forms of legal tender or currency – the bond notes and … the electronic currency … that is to say the RTGS (Real Time Gross Settlement) dollar. The Abovementioned bond notes and RTGS dollars are at par with the Zimbabwe dollar, that is to say each bond not unit and each RTGS dollar is equivalent to a Zimbabwe dollar, and each hundredth part of a bond note unit and each hundredth part of RTGS dollar is equivalent to a Zimbabwean cent.

According to the statutory instrument, references to the currency of Zimbabwe shall, with effect from 24th June, 2019, be construed as references to the form of legal tender.

Foreign currency accounts will still be operational in Zimbabwe, states the statutory instrument.

“Nothing shall affect the opening or operation of foreign currency designated accounts, otherwise known as ‘Nostro FCA accounts’, which shall continue to be designated in the foreign currencies with which they are opened and in which they are operated …”

Statutory Instrument 142 of 2019 also states that payment of imported goods can be paid in foreign currency.

“Nothing shall affect the requirement to pay in any of the foreign currencies … duties of customs in terms of the Customs and Excise Act (Chapter 32:02) that are payable on the importation of goods specified under that Act to be luxury goods, or, in respect of such goods, to pay any import or value added tax in any of the foreign currencies … as required by or under the Value Added Tax Act (Chapter 23:12).

The new regulations, published in the Zimbabwe Government Gazette on Monday and known as the Reserve Bank of Zimbabwe (Legal Tender) Regulations 2019, allow people to purchase international airline services in any foreign currency.

Some economists claim that the new regulations would result in the crippling shortages of basic goods as traders import them in foreign currency and are expected to sell them in the local currency, whose value is expected to drop within the next few weeks due to high inflationary levels in the country.

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