IFM Correspondent
January 30, 2017: In 2009, Zimbabwe stopped printing its currency, with currencies from other countries being used and by mid-2015; Zimbabwe announced plans to have completely switched to the United States dollar by the end of the year.
In June 2016, nine currencies were legal tender in Zimbabwe but it was estimated that 90% of transactions were in US dollars and 5% in Rand.
However, the liquidity of the US dollar has rapidly decreased resulting in a serious cash crunch. According to local media reports, the Zimbabwe government has offered to pay its workers with land instead of the usual annual bonuses they are paid in November and December.
Bonuses paid to public workers are usually equivalent to a month’s salary. But the government is offering to pay the workers residential land in lieu of bonuses. Plots of residential land are often without access to roads, electricity and sewage systems, and thus difficult to sell or even use — making them an undesirable option for the employees.
The government spends more than 80% of its budget on the salaries of public workers. But as the economy has stagnated, the government has struggled to pay those salaries, a cost of more than $250 million every month.
The shortage of cash in the African nation has led to a severe liquidity crisis. Banks are now capping customer withdrawals at $150 a week. The cash crunch is not likely to ease in 2017.