RBZ made this announcement yesterday and justified the move as a measure of stabilizing the market in Zimbabwe during the Covid-19 pandemic. RBZ together with the Finance Minister Mthuli Ncube had banned transactions in foreign currency on the basis that they were introducing the Zimbabwean local currency and this has since proved to be a failed monetary policy. This move has effectively dollarized the economy, which will be good for a brief period but only to those who have access to the US dollar and that's less than a quarter of the whole population. All this will bring is further chaos because service providers will start demanding payment in forex, just like fuel stations are already doing and it's only a matter of time before the market rejects the Zim dollar completely and switch to use of foreign currency like back in 2008. Introducing the US dollar doesn't necessarily mean that an economic miracle has been performed because the US economy is also heading towards its own crash as analysts have predicted. It's evident in the low economic activity due to the virus and the government printing more money to finance bailouts to businesses and grants for the general public. What the government of Zimbabwe should effectively implement is also a suspension of Income-tax on all workers even if it's for a brief time period as this will go a long way in boosting consumption and economic activity. The other measure I'd suggest is to suspend corporate tax because the government has no capacity to bail out businesses so suspending corporate tax will ease the burden of declining sales during the pandemic. The last suggestion I'd give is that the government should be completely transparent as to how they're using the 2% tax on all transactions imposed by Mthuli Ncube. If the government is to continue collecting it then they should channel it in efforts towards curbing and containing the virus.
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