The World Bank has subtly distanced itself as the driving force behind the introduction of the new currency in Zimbabwe.
It says it only provides political advice to several countries, Member states such as Zimbabwe that have the privilege or discretion to choose the currency of their choice.
This was in response to Reserve Bank Governor John Mushayavanhu’s claims that ZiG was the brainchild of the Bretton Woods Institution.
Muchyavanhu claimed that the World Bank had a central role in the ZiG initiative through consultations.
Now he is backing down under pressure, saying the World Bank was not the architect of ZiG.
On April 5, the apex bank introduced the Zimbabwe Gold Note (ZiG), the country’s new currency that effectively replaced bond notes and RTGS.
During the presentation of ZiG, Moshayavanhu said the new currency would be backed by foreign exchange reserves and gold.
Speaking at a breakfast meeting after the monetary policy review in Bulawayo recently, the central bank chief said monetary authorities had limited knowledge of structured currency.
“We didn’t know much about structured currency. We had an advisor from the World Bank. A lot of the things you see about structured currency actually came from the World Bank.
“So, if you’re going to blame me, you’re actually blaming the World Bank. Maybe they didn’t advise us properly. And if they didn’t advise us properly, that’s fine. Let’s improve it.”
Research by The NewsHawks has revealed that there is no literature regarding “structured currency” found on the World Bank or IMF websites that suggests this could be a new currency.
A World Bank spokesperson told NewsHawks that while the multilateral lender provides policy advice to countries like Zimbabwe, member states remain independent on key policy decisions.
“We are committed to supporting the Government of Zimbabwe in its efforts to achieve economic recovery in the country,” the World Bank said in a written response.
“This is in line with our goal of creating a world free of poverty on a livable planet. This support includes technical expertise, in-depth research and analysis on sectors, such as the latest Zimbabwe economic update. It also includes perspectives on policy and development challenges at the request of clients. Governments They adapt this advice to their contexts and ultimately make final decisions on policy implementation in their countries.
The World Bank Group is one of the world’s largest sources of financing and knowledge for developing countries. Its five institutions – the International Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation, the Multilateral Investment Guarantee Agency, and the International Center for Settlement of Investment Disputes – share a commitment to reducing poverty, increasing shared prosperity, and promoting sustainable development.
Contacted for comment on whether or not the IMF played any role in the introduction of Zimbabwe’s new currency, an IMF spokesperson said the fund was still assessing the impact of the local currency on the economy.
Unlike the World Bank, the IMF’s primary responsibility is to monitor the economic and financial policies of member countries and provide them with political advice, an activity known as monitoring. As part of this process, which also takes place at global and regional levels, the IMF identifies potential risks and recommends appropriate policy adjustments to support economic growth and enhance financial stability.
In Zimbabwe, the IMF, through its periodic Article IV consultations, has over the years published policy advisory notes on the country’s macroeconomic environment. Issues addressed over the years include inflation and the currency system.
“The choice of a particular exchange rate regime is the prerogative of state authorities,” an IMF communications official in Washington, D.C., said in a written response to The NewsHawks.
“The role of the IMF is primarily to advise on whether the country’s economic conditions and political position are compatible with the exchange rate regime chosen. In this context, we stand ready to advise the Zimbabwean authorities on policies aimed at restoring macroeconomic stability.” But we need time to review the design and implications of the new currency arrangement.
Just one month after ZiG’s launch, some economic analysts questioned the central bank’s claims that it would be backed by bullion reserves. Newshooks
