A plan to rescue Zimbabwe’s flailing economy by pegging the Zimbabwe dollar to the South African rand is being put together by the Southern African Development Community (SADC), the Sunday Independent reported.
The plan, according to the paper, would involve extending the multilateral monetary area (MMA) of South Africa, Namibia, Lesotho and Swaziland to Zimbabwe.
The rand is legal tender in MMA countries and local currencies are pegged to it, stabilising their exchange rate with the dollar and other major currencies.
Record inflation, officially put at 4 500% but thought to be up to twice as high, has rendered the Zimbabwe dollar, and Zimbabweans’ salaries, almost worthless.
On the black market the US dollar trades for about Z$250 000.
SADC’s Zimbabwe rescue package would see the Reserve Banks of South Africa and Botswana pump money into the Reserve Bank in Harare.
In return autocratic President Robert Mugabe would be obliged to agree to fundamental political reforms, the Independent reported.
Representatives from Mugabe’s ruling Zanu-PF and the opposition Movement for Democratic Change (MDC) of Morgan Tsvangirai are due to start negotiations on reforms under South African mediation near Pretoria on Monday, according to the paper. – Sapa-DPA