Zimbabwe Central Bank governor says new currency will be a success, sceptics will eat their words

Reserve Bank of Zimbabwe governor, John Mushayavanhu (Images: Daily News)
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A BULLISH Reserve Bank of Zimbabwe (RBZ) governor, John Mushayavanhu, says the country’s new currency, the Zimbabwe Gold (ZiG), will be a success that will “silence all the doubting Thomases” who are questioning it.

Speaking at an oversubscribed breakfast meeting in Harare yesterday, which was organised by independent national commercial television station 3Ktv, Mushayavanhu also said ZiG would help to stabilise prices and lift the lives of ordinary people.

He also implored all Zimbabweans to work together to ensure that both the new currency and the country’s economy would flourish in the interest of all citizens.

“Why can we not accept this new currency that we have? As Zimbabweans, we need to work together to make this currency stable and work. “We have suffered from hyperinflation and we sat down as RBZ and the ministry of Finance, the parent ministry, and we came up with this structured currency which is backed by gold and other precious metals.

“Going forward, the exchange rate is going to be market determined. I did tell you that the starting rate for ZiG was 13,56, but yesterday (Tuesday) the market determined and ZiG strengthened to 13,53. That is the way we want it,” Mushayavanhu said.

“The central bank also has enough resources to intervene if we think that the exchange rate is going out of hand,” he added. Mushayavanhu said the issue of illegal foreign currency dealers would soon be a thing of the past.

“I heard illegal forex dealers yesterday spent the day basking in the sun at Zimex Mall (in the Harare CBD). I don’t feel sorry for them because what they were doing was illegal. “In trying to make sure that we keep a tight monetary policy, we have also come up with five measures, which focus on creating demand for the local currency.

“The government will make it mandatory for companies to settle at least 50 percent of their tax obligations on quarterly payments dates (QPDs) in ZiG,” Mushayavanhu said further. “The Bank will continue with its strict liquidity management to mitigate against shocks that cause spikes in the exchange rate.

“It will ensure optimal money supply management and containment of reserve money growth within the limits of growth in reserves. “The Bank will also maintain a tight monetary policy stance to ensure sustainability of the monetary anchor and ensure efficient management of liquidity and money supply. “We will also discontinue all quasi-fiscal activities and adhere strictly to statutory limits on the Reserve Bank’s lending to the government,” Mushayavanhu added.

He repeatedly assured the gathered delegates that the central bank would not print excess money which would cause inflation to spike. “The structured currency should result in the dissipation of inflationary pressures in the short to medium term. “Inflation expectations are anticipated to be well anchored towards the observed trend of domestic United States dollar inflation.

“If printing money was a solution, everyone was going to be rich and we are not going that route. I cannot do the job of permanent secretary (George) Guvamatanga. “The minister and perm sec cannot come to me and say give me money. The central bank is independent. I will not give him … because the law allows me to be independent,” Mushayavanhu also said. Meanwhile, business and economic analysts at the event applauded the RBZ, saying the introduction of the country’s new currency was the best way to go.

The president of the Confederation of Zimbabwe Retailers (CZR), Denford Mutashu, said the country would now be in a better position to develop using its new currency. “As the CZR, we welcome the monetary policy statement and we embrace the new currency ZiG. We will do all that we can as a significant partner to make sure that we play our requisite role in educating and creating awareness among the public,” he said.

“Nyika inovakwa nevene vayo (the country is developed by its people) and by its own currency. Therefore, we need to support our currency. “I have, of course, seen various social media posts attacking the currency. Let’s give the currency a chance. Let’s give the governor a chance,” Mutashu added.

Economist Prosper Chitambara, who was also among the panellists, said the recent MPS provided a “strong foundation” for the country’s economic growth going forward. “The monetary policy statement provides us with renewed hope and optimism that we can break from the mistakes of the past and be able to chart a new course forward in terms of our macroeconomic reform agenda.

“The governor has done a very detailed diagnostic analysis of some of the key binding constraints affecting our economy on the macro-economic front. “Like the good doctor that he is, he has also provided a very good prescription in terms of what we need to do as an economy and as stakeholders to extract ourselves from the demon of macroeconomic instability and chronic inflation trends that the economy has been facing,” Chitambara said.

All this comes as Zimbabweans have been given 21 days to convert the Zim dollar notes that they have to ZiG, which will circulate within the current multi-currency system — while all banks have been directed to convert their systems to the new currency.

The currency will be in denominations of 1, 2, 5, 10, 50, 100 and 200 notes, in addition to having coins in denominations of half and quarter ZiG Meanwhile, other leading businesspeople have also welcomed the commitment by Mushayavanhu that he will not engage in quasi-fiscal activities which have been blamed for fuelling inflation and exchange rate volatility in the country in the past.

Speaking to the Daily News’ sister paper, the Daily News On Sunday this past weekend, the president of the Confederation of Zimbabwe Industries (CZI), Kurai Matsheza, said if the RBZ stuck to this commitment, ZiG would be both successful and sustainable going forward.

This comes after Mushayavanhu promised when he presented his inaugural MPS in Harare on Friday last week that the central bank would not engage in quasifiscal activities under his watch. “The new governor gave his maiden statement and in it he repeated several times that money printing will not happen under his watch.

We welcome this assurance. “As expected, a new currency the ZiG was introduced. Our understanding and reading is that it will operate in a multi-currency regime. Again we welcome this.

“The biggest challenge to any currency is money printing, but as per the governor’s commitment, this will not happen. If this is followed through, we think the new currency will succeed. “Of course, this is the first step and other steps will have to be undertaken underpinned by a stable currency. The infrastructure will have to be addressed for economic growth,” Matsheza said. – Daily News