Zimbabweans new common enemy the RTGS dollar has been all the talk. Most of it negative and understandably so. In spite of our feelings we can still find some good in the introduction of this new currency on the block. Let’s have a look at some.
Cut our losses
The money, the US dollars were gone at the introduction of the bond note, what has happened with the RTGS dollar is a confirmation of that. Sometimes as Zimbabweans we have a tendency to be fighting the wrong fight. The constant arguments over bond note parity are one such example in my opinion. The fight should’ve been against its introduction. Now that that battle is over and done with (bar legal challenge) we can put this one to rest, cut our losses and move on to the next chapter. This is not be insensitive for those who have lost due this. The bond note era simply needed to go.
Pricing is simplified (maybe)
Now this one is not as clear cut but the MPS itself stated that the RTGS$ will be our unit of account and legal tender going forward. Effectively saying all pricing should be in RTGS dollars. What this eliminates at least on the surface would be the 3 (or more) tier pricing system. If indeed the exchange rate is to be established by the market then we can do away with complexities . A tendency toward Real Value Accounting or pegging may continue in favour of the more stable foreign currencies but this can be done with a simple calculation and a known market rate. Yes this was already being done in practice but we should be grateful it has been simplified.
You can pay for your foreign subscriptions again
Basic payments of international services are back or at least possible. While I’ve expressed reservations on the market as it stands, reduced control on the market may give true reflection of the forex rate and enable international payments again. The popular DStv maybe be available soon through banks if they can move to sort out the kinks in applying the rate and access to forex: a BDC that comes up with a arrangement where you pay for DStv in RTGS dollars with respect to the current rate and they credit Multichoice in forex for you will be a winner.
Nothing lasts forever, especially things that aren’t working and the bond note was one such thing. So while it’s a small victory in light of how far short it falls of satisfying the mark, it does signify a much needed shift in position. I’m one of many who will say this admission is 5 years late but let’s be glad as we have other longer pending admissions that are still yet to come. The simple act of moving away from the choatic policy of outlawing forex purchases while the entire economy needs forex for one reason or another was a counter-intuitive system.
If you owed someone….
So according to a plain interpretation of the language in SI 33 2019 all assets and liabilities denominated in US dollars were converted to RTGS$ dollars at the rate of 1:1. Simply put if you owed some US$500 you now owe them ZWL$20000. If you owe more than $500 then you could smiling very much. While this obviously at the expense of a creditor who will lose out in this case it’s one of the few positives that can be drawn. We should expect big legal challenges to this position to follow as some are owed huge amounts denominated in US dollars.
Surely nothing can be all bad, just like the RTGS dollar. Perhaps a few rules around its trade and auction could be changed to better make it useful but it certainly has some positives, be they precious few.