Reserve Bank of Zimbabwe Governor, Dr John Mushayavanhu, said the new currency, Zimbabwean Gold (ZiG), would not fail because it was not imposed on the market, but it was a well-thought-out Zimbabwean idea that should be embraced by all citizens. .
He was responding to questions during a business meeting organized by the Zimbabwe National Chamber of Commerce (ZNCC), Masvingo branch yesterday.
Contrary to some people’s opinions, Dr. Moshayavanhu said that ZiG was proposed by foreigners, he actually conceived the idea, adding that he remains confident that the currency will succeed if everyone embraces it.
ZiG is expected to rise from mid-year on the back of expected high demand in the market, he said.
“No one told us to introduce the ZiG coin, of course, when doing something, one might seek ideas and advice from others just to fine-tune it but that doesn’t mean that if you consult on something you want to do, it means you didn’t create it.
“We have consulted widely yes, but ZiG is my product as Reserve Bank Governor and if it fails it is my fault. It is my brainchild,” Dr Moshayavanhu said.
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 Fed Governor.
ZiG was introduced on 5 April after extensive consultation, and Dr Mushayavanhu is optimistic about its prospects for success.
“If it fails at all, but I don’t see why ZiG will fail and it will not fail; but if it fails, which is unlikely, it is entirely our responsibility as Zimbabweans and my responsibility as central bank governor.
“The ZiG is a Zimbabwean born currency, it is a Zimbabwean product made by Zimbabweans, myself included,” he said.
Dr Moshayavanhu said the reserves backing the currency, including gold, other precious metals and cash reserves, would undergo an independent audit every year, with the results announced publicly while auditors would also be given leeway to announce their views on the country. Affairs as a way to build confidence in the new currency.
He dismissed fears that the central bank would print more money, which would ultimately lead to more money in circulation, causing inflation.
When ZiG was introduced, the country had reserves worth US$285 million in the form of 2.5 tonnes of gold and US$100 million, Dr Mushayavanhu said.
At present, the economy has about 1 billion ZiG in circulation, which is equivalent to about 80 million US dollars worth of ZiG, meaning that the country has almost three times its reserves.
Dr Moshayavanhu said reserves to support ZiG are expected to grow through the government’s accumulated mineral revenue streams and fed by the 25 percent export revenue delivery requirement share.
Half of the proceeds from the 25% export delivery requirement will be released to the market, while 25% will be given to the government to meet its foreign currency obligations, with the Fed taking the remaining 25% to build its reserves.
Dr Mushayavanhu said he was optimistic that the willing buyer, willing seller model would work over time, and expected ZiG to strengthen by June when demand for the local currency is likely to rise as businesses will need it to settle their accounts in June. Payment dates are quarterly.
The government insists that companies pay 50 percent of taxes in ZiG, a move that is expected to stimulate demand and stabilize it later.
“The question I have is where will ZiG businesses get to pay the 50 percent tax in the QPD for June,” Dr Mashayavanhu said.
“This means that those who have ZiG will benefit because it will be in demand. So, ideally, some companies that sell their products exclusively in foreign currency such as gas stations, should consider starting to sell a portion of their fuel in ZiG so that they can leverage the local currency to pay Its taxes.
Regarding those who sell their goods and services using the ZiG black market price, especially pharmacies, Dr Mushayavanhu strongly warned them, saying such actions are illegal.
He called on the public to report these perpetrators to the Financial Intelligence Unit to take the necessary measures against them.
“It is the responsibility of members of the public to report those who peg the US dollar to the ZiG black market rate to the FIU because companies doing so are acting illegally and will be fined so heavily that it will be almost impossible to continue doing so,” he said.
Those who really need foreign currency to pay for things like school fees and medicines, among others, will get the money from their banks, but they have ruled out letting people walk into banks with ZiG to exchange them for US dollars at the counter, saying they do that. It will be like a dollar.
Dr Mushayavanhu said that by 2028, the transaction composition of the economy will be 80 percent ZiG and 20 percent in US dollars as the country moves towards Vision 2030 where it is expected to phase out the dollar completely.
The Fed will make efforts to keep the lines of communication open between the bank and citizens to build confidence in the currency. Currently, RBZ is conducting awareness campaigns to educate people mainly in rural areas about ZiG. Announce
