'Old wine in new bottle'; Zimbabwe’s
The new currency introduced by the Reserve Bank of Zimbabwe (RBZ) on Friday has been branded old wine in new bottles by economists and financial experts who doubt that it will stand the test of time.
RBZ governor John Mushayavanhu in his first undertaking as the new central bank boss after succeeding John Mangudya this month said the new currency was anchored by a composite basket of foreign currencies and precious metals (mainly gold) held as reserves for this purpose.
But economic experts told The Standard that the currency named Zimbabwe Gold (ZiG) will fail because of a number of reasons that include a large informal sector, lack of confidence, low production, high money supply and lack of political will among other ills.
“I do not think he will be successful,” said former Finance minister Tendai Biti.
“He just introduced the ZiG, which envelopes in the sentence of failure from the word go as the structured madness is insanity because.
“How can you introduce a structured currency without adequate reserves?”
“(Mushayavanhu) wants to make a structured currency in an ancient era where no one banks a currency anymore because it does not make money anymore to bank money.
“The people moved from the bullion-based currencies, which happened in the 70s because it is not sustainable.
“The modern currencies are based on trust and confidence and that is the problem with the Zimbabwean currency, there is no confidence in anything local.
“They will change currencies like diapers, but it will not work because people do not have confidence in the currency and Zanu PF.
“So, John has accepted poison and he is going to fail.”
Biti said that any efforts by the new governor to cut on money supply would not be fruitful as he does not have control at the central bank.
Economist Chenayimoyo Mutambasere said: “This is the same trick used by his predecessors, funny money chasing good money and he will make his mark with the next phase of hyperinflation for sure.”
Gift Mugano, a professor of economics, said as long as the ZiG is not used exclusively at fuel stations, passports offices and payment of taxes and duties, schools, it will not work.
To allow exclusive use of the new currency in those places will create demand, hence strengthening it.
“Another serious threat to ZiG, which requires special attention is excessive liquidity from the Ministry of Finance going towards payment of contractors and civil servant salaries,” he posted on microblogging site X.
While presenting his monetary policy statement, Mushayavanhu declared that the bank will continue to maintain a tight monetary policy stance to ensure sustainability of the monetary anchor to control excessive money printing.
ActionAid Zimbabwe, a global federation, said while the initiative to introduce a new currency may be presented as a solution to Zimbabwe’s economic challenges, it believed that what Zimbabweans truly need is the restoration of confidence in the economy, not the introduction of yet another currency.
“For years, Zimbabwe has grappled with the consequences of currency instability. We have witnessed the introduction of various currencies, each accompanied by promises of economic recovery.
“However, the reality on the ground has often fallen short of these promises, leaving Zimbabweans vulnerable to economic uncertainty and hardship,” it said in a statement.
“The introduction of the ZiG currency risks repeating the mistakes of the past.
“Instead of addressing the root causes of our economic challenges, it offers a temporary fix that fails to inspire confidence among Zimbabweans.
“We believe that true economic recovery can only be achieved through comprehensive reforms that address issues such as corruption, mismanagement, and lack of transparency.”
The organisation called on the government to prioritise measures that would rebuild trust in the economy.
This includes fostering an environment that is conducive to investment, promoting accountability and good governance, and prioritizing the needs of ordinary Zimbabweans.
“We urge policymakers to engage in meaningful dialogue with stakeholders from all sectors of