The Governor of the Reserve Bank of Zimbabwe (RBZ), Dr John Mushayavanhu, has predicted there will be significant demand for ZiG by June when 50% of the Quarterly Payment Date (QPD) will be paid in local currency.
He said the demand for ZiG would be so intense that even gas service station owners would look for it.
Dr Mushayavanhu was speaking at the breakfast meeting organized by the ZNCC for the Monetary Policy Statement and Review of the Regulated Currency held at a local hotel in Masvingo recently.
He advised companies that do not accept ZiG that there will come a time when they will need the local currency to settle their tax obligations.
“There has been talk that if ZiG cannot buy fuel, passport etc, why would people want it? We are in a multi-currency arrangement.
“The government said from June that all QPD payments will be made 50% in ZiG. This move was taken in an attempt to increase demand for ZiG because one of the issues we identified before we came up with the monetary policy statement was that there was no demand for ZiG on Launch.
“What that will do is that by June there will be huge demand for ZiG,” he said.
He said there was US$90 million worth of ZiG in circulation and the amount was less than the US$150 million worth of ZiG that would be required for 50% of QPD.
“I am saying this to warn people that you may be a fuel garage owner in Masvingo and sell your fuel in US dollars only, that is good but you will also pay tax in June, where will you get ZiG from? You better sell some fuel in ZiG until June comes,” he said. June and you have ZiG in place.”
The current environment is that transactions are 80% in USD and 20% in ZiG.
Dr Mashayavanhu said he would ensure that the gold-backed currency remained stable by monitoring the amount of ZiG in circulation versus the amount of reserves.
“We started with 2.5 tons of gold worth US$185 million, and we also have US$100 million in our bank account for the US$90 million plus or minus the value of the ZiG coin in circulation. We have hedged more than 3 times and this should be a good start. We have learned from the past that any further increase in the amount of ZiG in circulation must be offset by an increase in reserves.
“The President has directed that any royalties paid by mining companies will be paid in kind to the central bank and used to build up reserves for the central bank and that is how we built the 2.5 tons. When we buy foreign currency from exporters, who have to hand over 25% of it in exchange for ZiG, it is sold Half of the money is back in the market and the other half is divided into two parts, 50% goes to the government to meet the government’s foreign exchange liabilities and the other 50% is used to build up the central bank’s reserves, Dr. Mushayavanhu said.
He added that they will ensure that reserves in the form of gold and US dollar balances are reviewed every year and the results will be made public.
He added: “We monitor on a daily basis the movement of the amount of money in circulation. We have introduced a daily dashboard for portfolios, where every day at 4pm I get an update about the volume of funds in circulation, reserves and exchange rate, and if anything is moving in the wrong direction, we act quickly so that it is corrected. He added.
He said that as the currency maintains stability, banks will begin offering mortgages and medium-term financing. Masvingo mirror
