Zimbabwe’s gold-backed currency faces uncertainty amidst fiscal policy woes

Zimbabwe’s recently introduced gold-backed currency, the Zimbabwe Gold (ZiG), is facing uncertainty amidst fiscal policy challenges and a lack of clear direction from the government.

The new currency was introduced to stabilize the economy and curb inflation, but its success is dependent on the government’s ability to implement complementary fiscal policies.

Speaking in Parliament on Thursday, Dzivarasekwa legislator Edwin Mushoriwa said: “The Monetary Policy has not been in sync with our fiscal policy, and this has been a problem.”

“The government needs to live up to its word and stop printing money. We need to make sure that the government lives within its means.”

The introduction of the ZiG was met with a slow start, with a lack of bank notes and coins to support the new currency.

“One of the major challenges that you then see even when the new Governor introduced the new currency, there was a lackadaisical approach first by the RBZ as an institution and also even the Fiscal Policy authorities.

“We knew way back because the President had indicated that we were actually moving into the trajectory of bringing ZiG currency as early as February. But guess what Madam Speaker?

“We reached a stage where the new currency was introduced, but there were no bank notes or coins to support that.

“Even in terms of publicity, it was so poor compared to the standards that were set by RBZ previously when we had these currency reforms under the former Governor, Dr. Gideon Gono,” Mushoriwa said.

The government’s delay in implementing fiscal policy reforms has also raised concerns.

“The Minister of Finance needs to come up with credible fiscal policy interventions and not wait for the Mid-Term Fiscal Review,” said Mushoriwa. “We need to make sure that the government’s activities move towards the use of ZiG rather than relying on other currencies.”

Zanu-PF Hurungwe East Constituency MP Chenjerai Kangausaru said more needed to be done to reduce excessive bank charges.

“Exorbitant bank charges have increased the opportunity cost of maintaining a small account, discouraging potential savings and pushing poor citizens from formal banking channels,” said Kangausaru.

The government’s reliance on police enforcement to control the parallel market rate and the lack of a clear roadmap for the transition to the ZiG have also raised concerns.

“We need to make sure that our currency remains strong, and we need to make sure that the government lives up to its word,” said Mushoriwa.

“We cannot rely on police enforcement alone to control the parallel market rate.

“We need to have a clear roadmap with signposts and milestones.

“We cannot just have a roadmap without clear direction.”

Mushoriwa added: “We want the ZiG to prosper, and we want the Zimbabwe dollar to be there so that our future as a country may be in a position to move forward.”