Zimbabwe’s banks have backed President Emmerson Mnangagwa’s plan to make the local currency, the Zimbabwe Gold (ZiG), the country’s sole currency before 2030 but only if the country manages to tame inflation and builds enough reserves.
Finance news agency Bloomberg says Bankers Association of Zimbabwe president Lawrence Nyazema said: “We committed to coming up with a roadmap which would lead us to having a mono-currency by 2030. The pace can be expedited if we manage ZiG inflation and build reserves.”
Zimbabwe last year said it would retain the current multiple currency regime until the end of 2030 but last week Mnangagwa said he would accelerate the return to a mono-currency and hinted that this could be done over the next two years.
Central Bank Governor John Mushayavanhu has urged a gradual de-dollarisation with transactions in ZiG rising from the current 20% to 30% by the end of this year, moving on to 40% by the end of next year and 50% by end of 2026.
Mushayavanhu said once the local currency accounted for half the transactions in the country, there was no need to legislate for a mono-currency as confidence in the ZiG will carry the day.
This would tally with Mnangagwa’s plan without his administration breaking its promise to keep the multiple currency system until 2030 because the local currency will start dominating the market from then on.
Introduced on 5 April this year, the ZiG has stood its ground against the United States dollar which accounts for 80% of transactions in the country.
The ZiG is backed by foreign currency and gold reserves which stood at US$285 million in April but have since improved to US$370 million.
Finance Minister Mthuli Ncube could shed more light on which direction the local currency will go when he presents his mid-year budget review on 25 July.
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