HARARE, July 17 (Reuters) – Zimbabwe’s government is committed to ensuring that its new currency, launched in April, remains fully backed by reserves to build trust, central bank governor John Mushayavanhu told Reuters on Wednesday. The new currency, called Zimbabwe Gold or ZiG, is the country’s sixth local currency attempt in 15 years following hyperinflation under former leader Robert Mugabe.
Thank you for reading this post, don't forget to subscribe!The last currency, the Zimdollar, fell 80% in three months before being scrapped, and authorities now face the challenge of convincing a skeptical population to stop using foreign currencies. “Confidence can only come with us walking the talk,” said Mushayavanhu, emphasizing the central bank’s commitment to not print money for government spending.
The government has a plan to increase the use of ZiG and build up gold and foreign exchange reserves, which have grown from $285 million at launch to over $380 million. Currently, ZiG is used in about 20% of local transactions compared to 80% for foreign currencies. “We want to gradually tilt that ratio to 70:30 by year-end or 60:40 thereafter,” Mushayavanhu said, outlining the roadmap.
Despite reports of ZiG shortages in shops, Mushayavanhu assured that enough notes had been printed to meet demand. The central bank’s reserve strategy could accelerate with rising commodity prices, and it is targeting 3 tons of gold reserves by year-end, up from 2.5 tons in April.
Mushayavanhu expects inflation to end the year around 5%, close to the International Monetary Fund’s estimate of 7%. “For the first time, our numbers are almost aligned with those of the IMF,” he said. “Let’s embrace our new currency and make it work.”
