Nqobile Tshili, nqobile.tshili@chronicle.co.zw
THE adoption of the new structured Zimbabwe Gold (ZiG) currency will deliver long-term financial services stability and restoration of savings, leading to a favourable environment for the economy to transition away from the dollar and establish the local unit as the mainstream currency, Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube has said.
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Book NowThe market has already embraced the new ZiG currency following its introduction last Friday with businesses and service providers now able to transact with the gold-backed medium of exchange, save for a few banks that were still fine-tuning their systems by the end of the day yesterday.
With civil servants expected to start receiving their salaries next week, Prof Ncube assured public sector workers that their accounts will reflect ZiG on the local currency component of their earnings and warned businesses against rounding off prices as this is tantamount to ripping off consumers.
As ZiG usage is in full swing across the country with a solid rate of US$1: ZiG 13,5, the Government has clarified that the country remains under the multi-currency regime until 2030 while the use of Zim-dollar notes is permissible until the end of the month.
In a ministerial statement on the new currency delivered in Parliament, Prof Ncube said refined policy interventions will soon be introduced to consolidate the usage of ZiG.
He also explained the reduction of interest rates in banks as a positive economic indicator, emphasising that the country has adequate gold reserves and forex to back up the new currency.
“In addition to what the RBZ is declaring as reserves of US$285 million, we have an additional US$300 million in Treasury, which we stand ready to assist the Central Bank if there is a shock to the system,” said Prof Ncube. “So, the gold and cash reserve holdings with the bank represent more than three times cover for the local currency being issued.
“The main issue being the introduction of a new currency, but also seeing the drop in interest rates among other measures. It is also a critical step towards our long-term de-dollarisation agenda.
“It is our hope that this will bring the much-needed currency stability.”
Prof Ncube said more measures towards strengthening the new currency were being worked on with part of these being the directive for 50 percent of the company taxes and corporate taxes being payable in ZiG, which is expected to increase demand for the local currency.
“We will be very specific when we make the announcement as to which fees and which taxes will be paid in ZiG beyond the request that corporates pay in domestic currency.
“We will make an announcement in the fullness of time. On purchase of goods and services in ZiG, in the fullness of time we will announce specific services that can be purchased in ZiG as we seek to promote the demand for our local currency,” said Prof Ncube.
Following the introduction of the new currency, the Government has noted concerns over goods and service providers who are rounding off prices, thereby shortchanging consumers. On this, Prof Ncube said they should stick to the initial prices of basic commodities, as was benchmarked against the US dollar.
“We will take a look at these issues to see what is happening here. In fact, I’m already aware of a situation where some retailer of bread for example; prior to the introduction of ZIG, a loaf of bread was trading for US$1, the price of a dollar in ZIG is 13.56, but the price of bread was rounded off to 14,” he said.
“There should be no rounding off as it is not a good idea. That is a price increase and means that the bread is now US$1, 3c, or 5c as opposed to just US$1. So, we are quite aware of this issue and we are following up with some of the companies to do a proper translation and not to round up, which is contributing to a price increase.”
Prof Ncube said civil servants who are expected to start receiving their April salaries next week, will be paid in ZiG even though banknotes will start circulating at the end of the month.
“ZiG is already effective and civil servants will be able to receive their salaries on time on 18 April 2024,” he said.
To ensure adequate public awareness and appreciation of the new monetary policy, Prof Ncube said the Government will embark on a public information blitz to build confidence in the usage of the local currency.
He said Zimbabweans should be proud of their local currency as it is one of the things that are part of their national identity.
