A Zimbabwean economist has said authorities should consider paying a portion of government employees’ salaries with gold coins. The economist said partially paying government workers with gold coins can “help curtail the black market dominance” in the country’s currency market.
Dollar Shortages and Rising Inflation
A Zimbabwean economist, George Nhepera, has urged authorities in the Southern African nation to consider paying a portion of government workers’ salaries with gold coins. According to the economist, paying part of the workers’ salaries with gold coins can “help curtail the black market dominance” in the country’s currency market.
Nhepera’s call for measures to cushion government workers with gold coins follows the local currency’s sharp depreciation in June. The currency’s plunge on the parallel market is reported to have sparked a wave of steep price hikes which eroded the purchasing power of salaries denominated in local currency.
While workers have in some cases demanded to be paid in U.S. dollars, Zimbabwean authorities insist that the country does not have enough greenbacks and therefore this may not be a sustainable option. The government’s reluctance to pay workers with U.S. dollars coupled with rising inflation has now prompted experts like Nhepera to suggest alternatives that the Zimbabwean government can choose.
Analyst: Calls for Gold Coin Denominated Salaries Must Be Rejected
In remarks published by the Chronicle, Nhepera, who is also the Lupane State University business clinic development manager, said the government should think of using recently launched financial instruments.
“To this end, they should be promoted in terms of their use for both people-to-people transactions and people-to-business and business-to-business. Once this has been achieved with full market confidence, surely our government can take a giant step to include a portion, say 50% of the civil servant salaries and benefits be paid in these innovative instruments,” the economist said.
As reported by Bitcoin.com News, the gold coins were launched by the Zimbabwean central bank as part of measures that were aimed at diminishing local residents’ demand for U.S. dollars. The gold coins were also expected to act as “an alternative retail investment product for value preservation.”
Meanwhile, in the same Chronicle report, Morris Mpala, an economic analyst, is quoted arguing against Nhepera’s suggestion. According to Mpala, paying part of government employees’ salaries with gold coins “defeats the purpose of encouraging the use of local currency to the populace.” The economic analyst added that while the idea might seem noble, from the standpoint of “liquidity management” this should not be encouraged.
Terence Zimwara is a Zimbabwe award-winning journalist, author and writer. He has written extensively about the economic troubles of some African countries as well as how digital currencies can provide Africans with an escape route.