‘Another looting scheme brewing with Fidelity selling gold coins’
"It is at best a move to enrich a few and worst just another empty rhetorical talk akin to fiddling while the nation burns," Pride Mkono
Analysts have argued that the decision by the Government of Zimbabwe to introduce gold coins into the market “as an instrument that will enable investors to store value” was a creation of a launchpad for looting at the country’s mint company, Fidelity Printers and Refiners.
Finance Minister Mthuli Ncube and Permanent Secretary George Guvamatanga on Monday announced measures recommended by the Reserve Bank of Zimbabwe (RBZ)’s Monetary Policy Committee (MPC) to stabilise the economy and financial crisis.
The measures included but not limited to increasing the Bank policy rate from 80% to 200% per annum, increasing the Medium Term Accommodation interest rate from 50% to 100% per annum, increasing the minimum deposit rate for ZW$ savings from the current 12,5% to 40% per annum and increasing the minimum rate for ZW$ time deposits from 25% to 80% per annum, and Maintaining the Statutory Reserve Requirements at the current levels of 10% for demand and call deposits and 2.5% for savings and time deposits.
The Government also introduced the gold coins.
“The MPC resolved to introduce gold coins into the market as an instrument that will enable investors to store value. The gold coins will be minted by Fidelity Gold Refineries (Private) Limited and will be sold to the public through normal banking channels,” Ncube said.
Analyst Pride Mkono said the gold coin was a scheme for arbitrage where a few political elites will benefit at the expense of the struggling economy. He said the Zanu-PF regime lacked the capacity to use gold coins as a store of value because:
“Over 60% of gold is being handled by private players outside fidelity printers. This is in addition to linkage through smuggling.
“The bulk of our gold export receipts goes to meeting recurrent needs such as importation of basic commodities like grain, medicines, fuel etc. There is not enough remaining to use for servings of ordinary people.”
He further stated: “Assuming that they actually mint the coins, there is lack of trust that the government can handle them on behalf of citizens without working up tomorrow and people are holding worthless pieces of paper as happened when the converted USD balances to the moribund ZWL.
“At the face of it this is a scheme for arbitrage where a few political elites will benefit at the expense of the economy.
“Overall, the announcement is vague and devoid of any legal provisions. It is at best a move to enrich a few and at worst just another empty rhetorical talk akin to fiddling while the nation burns.”
Prominent economist Tinashe Nyembesi said corruption controversy was brewing with Fidelity expected to sell gold coins in ZWL at 50% discount.
“Another looting scheme is brewing with fidelity selling gold coins in ZWL at 50% discount. Ostensibly this is being done to compete with ZSE (Zimbabwe Stock Exchange) and USD.
“Clever banks/borrowers will take excess liquidity which RBZ confiscates at 0% and buy gold at 50% discount.”
He further stated: “Even if the gold coins were sold in dollars I am at a loss as to why the RBZ MPC should be involved. This reeks of overreach. RBZ must have gold reserves. It should’ve used SDR’s to buy gold and steady the monetary system.
“Zimbabwe’s gold has been oversold to its creditors. Does RBZ wish to extend this gesture to unsuspecting investors by selling gold it doesn’t have?
“Germany kept its gold in America as a sign of transparency. As is. When ZWL is legal tender, the sale of gold coins is a ruse.”
President Emmerson Mnangagwa’s loyalist Kudzai Mutisi argued: “Gold coins are already readily available for purchase in US$. In fact, the US$ is more stable than the gold price.
“Since Zimbabwe produces lots of gold, the RBZ could use the gold coins to prop up the Zim$. But then, obsession with US$ takes priority.”
Opposition Citizens Coalition for Change in its alternative policy document postulated that there was a need for the government to start by creating a proper foundation for using gold as a store of value.
“Little was said by Minister Ncube about how the gold coin system would function. There is a need to set out a proper framework for the use of gold coins as a store of value and a need to ensure that there are no loopholes that will allow arbitrage and for elites to obtain gold coins at a discounted rate,” read the statement.