This was just on the part of government – meanwhile banks were also creating money through lending (Note: assumption is that the reader understands how banks create money). All this money created locally could not match the real United States dollars generated through the exports of goods and services.
From this basis alone and from that point on, the country was no longer using proper United States dollars.
The symptoms started showing in March 2014 when the government failed to pay its workers on time. It was the start of serial shifting of pay dates which has gotten chronic over the years.
In the first quarter of 2015, the Government failed to remit civil servants deductions for payments like medical aid. It was at that point that Chinamasa announced the scrapping of bonuses which Mugabe promptly reversed.
The worse the problem became, the more government created money through borrowing, worsening the economic challenge and creating a vicious cycle.
As things got worse, citizens became disenchanted, and by July 2016 when the “This Flag” movement called for a successful shutdown, the government had its back to the wall, especially after civil servants heeded the stayaway.
From that time on, more local money was created to take care of this problem. The consequence was that the cash shortage that had started in December 2015 became more pronounced as created local balances could not match actual United States dollars created through exports, foreign direct investment, diaspora remittances and other avenues.
That Zimbabwe is still using the United States Dollar as currency is pure fiction.
Zimbabwe abandoned the USD as currency way back in 2013 after the elections.
The government did it nicodemously when we all weren’t looking.
This was partly driven by greed, partly by ZANU PF’s cluelessness and partly by the party’s perpetual electoral mode – it campaigns more than it governs.
What does this all mean?
It simply means that we are back on the same road as we were from 2006 to 2008. The ghosts of shortages and inflation are creeping in.
Continued next page