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Martin Kadzere Senior Business Reporter
THE US shutdown will have slight or no impact on the Zimbabwean economy largely because the country’s trading level in the US dollar is marginal to the global economy, economist have said. Zimbabwe adopted a multi-currency regime on January 29 2009 in the wake of the sanctions-induced collapse of the Zimdollar, and of the four currencies adopted — the South African rand, the Botswana pula, the British Pound Sterling and the US dollar — it is the greenback that has become the main medium of exchange.

Though the shutdown is a comparatively small economic event by global standards, Zimbabwe is in a unique position by virtue of using the greenback.

Economists, however, say the diversified economic base stemming from the Look East Policy means Zimbabwe was not at much risk from developments in Washington.

Early this month, the US federal government entered a partial shutdown after Congress failed to agree on a new budget.
About 800 000 federal workers were sent on unpaid leave with no guarantee that they would get back-pay if the situation normalises.

It was the US first shut down in 17 years. The Democrats and Republicans have until tomorrow to come up with a deal to avoid the US hitting its debt ceiling of US$16,7 trillion.

An agreement between the two would raise the federal’s debt limit into early next year. It will include a short-term measure to reopen closed government agencies.

If no deal is reached, the US may not be able to pay all its bills, effectively making the nation bankrupt.
Economists said the US partial shutdown had directly affected the world’s largest economy as the negative sentiments were being reported through its exchange rate.

This would weaken the US dollar against major global currencies such as the pound and the euro.
“For, Zimbabwe, since the country uses the US dollar as the main currency, the country could stand a chance of having these effects, which could feed into the economy, through inflationary pressures or balance of payment problems depending on the responsiveness of exports and imports to currency depreciation,” an economics lecturer at the University of Port Elizabeth University Mr Gift Mugano said.

“However, none of the factors can significantly hit us as our level of trade in the US dollar terms are marginal to world economy.
“The lack of impact of this American turmoil on Zimbabwe economy is coupled by the fact that those economies which stand to gain from turmoil in America are also struggling with their domestic issues.

“For example, South Africa has been hard hit by industrial strikes in the recent months, which makes it difficult for the rand to gain significantly against the US dollar. And, this was the most probable gateway for the effects of the US shutdown to be felt in Zimbabwe because South Africa is Zimbabwe’s major trading partner.”

Another economic analyst Mr Witness Chinyama concurred.
“The US shutdown has no specific, direct impact on Zimbabwe as there is no direct link in terms of liabilities since the US dollar is a hard currency which is used almost everywhere in the world. This means there is no form of understanding with the issuing country,” he said.

Mr Chinyama added that if ever there had to be some impact, it would be the usual global effects that are not targeted at any specific country.

Mr Joseph Sagwati, an economist at Cernic Finance Group, however, foresees the US printing more dollars to pay its debts. “This will somewhat devalue the currency against other world currencies,” he said.  “And close home, the rand will cease its free-fall against the US dollar translating into high import costs for Zimbabweans.”

Equities research firm, FBC Securities said the fears of US dollar default on Federal debt highlighted the vulnerabilities across developing markets which provided a case for investors to consider alternative investment destinations like developing nations.

FBC Securities noted that there could be a flow of investment funds into Sub Saharan Africa, Zimbabwe included as investors would try to diversify their wealth to avoid risk.

Zimbabwe National Chamber of Commerce economist Mr Kipson Gundani said the US partial shutdown would not have any impact on Zimbabwe in short term but if this crisis persisted, it might affect the country’s trade earnings in the long run.