Zimbabwe not intending to introduce local currency any time soon

The governor of the Reserve Bank of Zimbabwe John Mangudya says Zimbabwe is not going to introduce a local currency any time soon because people must be prepared to accept it for it to succeed.

He told the Standard that economic fundamentals need to be right before the introduction of a local currency and denied that there was a rift between him and Finance Minister Mthuli Ncube over the introduction of a new currency.

Former Finance Minister Tendai Biti tweeted last week that Zimbabwe was intending to introduce a new currency that week but the week has come and gone.

When the currency was not introduced a local newspaper said this was because of a rift between Mangudya and Ncube.

Mangudya brushed off the story as fake news.

“There is no fallout between the minister, Honourable Professor Ncube, and myself as alleged,” he said.

“The whole story is all fiction and fake news of the highest magnitude. The meeting that is alleged to have taken place between officials from the Reserve Bank of Zimbabwe, including myself, with the minister never took place, which means everything else that was alleged to have happened at the non-existent meeting is fiction meant to confuse the market for reasons better known to the so-called ‘reliable sources’. I don’t stoop that low.”

On the introduction of a local currency, the central bank chief said: “Economic fundamentals need to be right before introducing our local currency. We also need social cohesion. People must be prepared to accept it for it to succeed. So we need those to be in place and we are working on ensuring that we deal with the fundamentals. We can then start to talk about the introduction of a local currency.”

Ncube said the country was going to introduce a new currency some time this year but gave 12 months in January. He also insisted that the fundamentals must be right.

Economist Eddie Cross said people should begin to see the impact of the reforms by Ncube from next month and in his opinion the economy will have stabilised in June or July providing the right environment to introduce a new currency.

Those in business, however, say that June or July might be too late as the country has no RTGS dollars now because of Ncube’s tight rein of the money supply.

“If we wait until June or July, the economy will have dollarised,” one business executive said. “Right now we do not have any RTGS dollars to pay bills so we may have to resort to our foreign currency accounts and this means that the economy is increasing getting dollarised.”

Ncube has ruled out the adoption of the United States dollar or the South African rand as the country’s currency arguing that adopting either of these currencies is not currency reform but capitulation.

President Emmerson Mnangagwa seems so confident that his administration’s reforms are working that he warned the opposition yesterday that his party will have more support in urban areas by the 2023 when the country is expected to hold elections.

Some of his close associates say Zimbabwe will start creating jobs within two years,  which will be another two years before the elections.

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