Vice-President Constantino Chiwenga has claimed the new structured ZiG currency is Zimbabwe’s first post-independence currency, having done away with the former Zimbabwe Dollar, which was inherited from the colonial government.
As a result, the VP urged the public and international community to welcome the ZiG while simultaneously warning speculators who attempted to destroy the new currency that their businesses could be shut down or could face arrest.
Chiwenga’s sentiments follow Zimbabwe’s troubled history with its currency since independence in 1980, including many revisions and re-denominations, and the ZiG is the country’s sixth attempt to relaunch its local currency.
Delivering his main speech at the International Business Conference held on Wednesday at the 64th edition of the Zimbabwe International Trade Fair (ZITF) in Bulawayo, Chiwenga said the ZiG currency would serve as a reliable medium of exchange, a store of value and unit of account to support the government’s efforts of attracting investment, stimulate growth and enhance the country’s competitiveness in the global marketplace.
“Given these boundless benefits, I therefore call on the public, the private sector, households, labour and businesses, civic society and the international community to fully embrace and support the ZIG,” said the VP.
The VP went on to say that the government led by Emmerson Mnangagwa has abolished the ZWL, which was inherited from the colonial government.
“We have done away with the ‘Bond’ which had been inherited from the time of Rhodesia, when after declaring the Unilateral Declaration of Independence (UDI ) they were given sanctions by the United Nations Security Council that’s why they came up with the bond,” Chiwenga said.
“The Bond did not come with Zimbabwe, it came with the Rhodesia Bond, that red note which you used to see so the Bond is away. We now have our Zimbabwe currency, support it!”
Chiwenga said the new currency should not be subjected to exchange rate volatility or manipulation by speculators.
“So speculators should cease. Some were running around trying to play around in the supermarkets, we know. Behave or you will get shut down or we will lock you (up),” warned the VP.
The VP said to create ‘super’ demand for the new ZiG, the government through Treasury has issued mandatory instructions to all public entities to pay 50 percent taxes through quarterly payments declaration in ZiG.
“The monetary policy statement has realigned interest rates which used to be around 130 to 150 percent to 20 percent. This is a positive development that will go a long way in providing credit to the productive sectors and boosting the country’s growth prospects,” he said.
According to Chiwenga, the expected benefits of these monetary policy measures are “huge and quite comforting.”
“The structured currency and the accompanying monetary policy framework will ensure price and exchange rate stability which is critical for the value preservation. I heard from the deputy Reserve Bank governor that you want interest rates to continue going down to five percent, as long as there is financial discipline it will be done,” said the VP.
“In addition, the structured currency is expected to support long-term business and encourage savings and investments in the economy. This will go a long way in restoring confidence in the domestic currency.”
Chiwenga added that the stability of the ZiG will boost investor confidence in the economy and lead to increased production and exports
“The economy will also experience an increase in domestic demand as people’s purchasing power gradually improves amid low and stable prices,” he said, adding that the central bank will continue to monitor interest rates to curb speculative borrowing.
“This will ensure optimal money supply and keep inflation under control. The ZiG is expected to provide a lasting solution to anchoring expectations which is critical for sustained price and exchange rate stability in the economy.”
In addition, Chiwenga said the Reserve Bank has also adopted a market-driven rate exchange system based on the concept of willing buyer-willing seller.
“These arrangements supported by the Reserve Bank’s commitment to optimise money supply will go a long way in fostering exchange rate stability thus minimising exchange rate premiums of yesteryears,” said the VP.
To make sure the exchange rate remains stable, the VP said the government has committed to using 50 percent of the foreign currency proceeds from surrendered requirements from strategic interventions in the foreign exchange interbank market.
“This is a development which will also enhance the demand for the local currency,” Chiwenga said.
To understand Zimbabwe’s ever-changing currency and timeline of monetary shifts, read: https://factcheck.cite.org.zw/zimbabwes-ever-changing-currency-a-timeline-of-monetary-shifts/
