The new currency, Zimbabwe Gold (ZiG), will not fail as it was not imposed on the market, but a well-thought out and purely Zimbabwean idea that should be embraced by all citizens, Reserve Bank of Zimbabwe Governor Dr John Mushayavanhu has said.
He was responding to questions floor during a business meeting organised by the Zimbabwe National Chamber of Commerce (ZNCC), Masvingo chapter yesterday.
Dr Mushayavanhu said contrary to views by some people that the ZiG was proposed by foreigners, he actually conceived the idea, adding that he remains confident the currency will work if everyone embraces it.
The ZiG is expected to firm from mid-year on the back of its anticipated high demand in the market, he said.
“No one told us to introduce the ZiG currency, of course, when doing something, one might seek for ideas and advice from others just to fine-tune but it does not mean that if you consult on something you want to do, it means you did not originate it.
“We consulted widely yes, but ZiG is my product as the Governor of the Reserve Bank and if it fails it’s my fault; it’s my brainchild,” said Dr Mushayavanhu.
He said he started thinking about the new structured currency in September last year when President Mnangagwa revealed to him that he would be the next RBZ Governor.
The ZiG was introduced on April 5 after wide consultations and Dr Mushayavanhu is upbeat about its prospects of success.
“If at all it fails, but I don’t see the reason why the ZiG should fail and it will not fail; but in the unlikely event that it fails, then it’s entirely our responsibility as Zimbabweans and my responsibility as Governor of the central bank.
“ZiG is a Zimbabwean-born currency, it’s a Zimbabwean product made by Zimbabweans, myself included,” he said.
Dr Mushayavanhu said the reserves backing the currency, including gold and other precious minerals and cash reserves, would be subjected to an independent audit every year, with results being declared publicly while the auditors will also be given leeway to make known their opinions on the state of affairs as a way of building confidence in the new currency.
He ruled out concerns that the central bank would print more money, which will eventually result in more money in circulation, causing inflation.
When ZiG was introduced, said Dr Mushayavanhu, the country had US$285 million worth of reserves in the form of 2,5 tonnes of gold and US$100 million.
Presently, the economy has about ZiG 1 billion in circulation, which is about US$80 million worth of ZiG, implying that the country has almost three- times cover in its reserves.
Dr Mushayavanhu said reserves to support the ZiG were expected to grow through inflows of mineral royalties accruing to Government and feeding from a share of the 25 percent export proceeds surrender requirement.
Half of the proceeds from the 25 percent export surrender requirement will be released into the market while 25 percent will be given to Government to meet its foreign currency obligations, with the remaining 25 percent taken by the RBZ to build its reserves.
Dr Mushayavanhu said he was upbeat that the willing-buyer, willing-seller model was going to work with time and anticipated the strengthening of the ZiG by June when demand for the local currency was likely to spike as companies would need it to settle their June quarterly payment dates.
Government is insisting that companies pay 50 percent of the taxes in ZiG, a move expected to trigger its demand and subsequent firming.
Said Dr Mushayavanhu: “The question that I have is where will companies get the ZiG to pay their 50 percent of taxes in the June QPD?
“It means that those who have the ZiG will benefit because it will be in demand.
So, ideally, some businesses that sell their products exclusively in foreign currency like fuel stations, should even consider to start selling part of their fuel in ZiG so that they raise the local currency for paying their taxes.”
On those selling their goods and services using the ZiG black market rate, especially pharmacies, Dr Mushayavanhu strongly warned them saying such actions were illegal.
He called on the public to report such culprits to the Financial Intelligence Unit (FIU) so that action is taken against them.
“The onus is on the members of the public to report those who are pegging the US$ to the ZiG black market rate to the FIU because the businesses that are doing that are acting illegally and they will be heavily fined that it will almost be impossible to continue doing that,” he said.
Those who genuinely need foreign currency to pay for things like school fees and medication, among others, would get the money from their banks but ruled out allowing people to get into banks with their ZiG to exchange it for US dollar on the counter saying doing so would be tantamount to dollarising.
Dr Mushayavanhu said by 2028, the composition of transactions in the economy would be 80 percent ZiG and 20 percent US dollar as the country moves towards Vision 2030 when it is expected to have fully de-dollarised.
Efforts would be made by the RBZ to keep lines of communication open between the bank and the citizens to build trust and confidence in the currency. At the moment, the RBZ is conducting awareness campaigns to educate people mainly in rural areas about the ZiG.
Herald
