Business Reporter
FINANCE Minister Prof Mthuli Ncube has taken the Zimbabwe Gold (ZiG) message to the International Monetary Fund (IMF) as part of the global diplomatic offensive on the new instrument.
The nation’s sixth currency was introduced on April 5 2024 with the Reserve Bank of Zimbabwe claiming that it was backed by 2,5 tons of gold and US$100 million cash.
Speaking to Bloomberg on the sidelines of the International Monetary Fund’s (IMF) spring meetings currently underway in Washington D.C, Prof Mthuli Ncube “Part of my job here this week has been to explain to the International Monetary Fund how this currency is structured ? What gave birth to it? What are the issues and frankly they have given us some good advice along the way which I can’t share with the public.
“We worked very well with the IMF as we issued this currency but we are aware that there are certain issues they want us to strengthen,” he said..
He said that the level of the exchange rate currently obtained in the markets is a very competitive one in the sense that it is ZiG13,56 to the US$.
“That’s a competitive exchange rate that compares well with other currencies in the region like the SA rand, Botswana Pula the Kwacha and so forth,” he said.
Ncube also defended the torrid time Zimbabwe is going through after highlighting that the currency challenges are currently a common continental challenge.
“Most African countries and many others in emerging markets are facing trouble in stabilising their currencies. Everyone is trying to figure out how best they can stabilise their currencies to maintain competitiveness.
“In Zimbabwe we have figured it out by making sure that our currency is linked to some reserves like gold, diamonds and also hard US$ .That’s how we have constructed it,” he said.
He reiterated that the newly introduced currency was crafted in a similar way to a currency board but without a fixed exchange rate and at the same time restricting it against volatilities through a firm assets backing.
He underscored that the nation was not returning to the gold standard and stressed the commitment to limit the issuance of the domestic currency and reserve money and only to increase it in line with base reserve assets.
