Zimbabwe dollar is coming back: Says Minister

Latest: There is panic among Zimbabweans  after the government announced last week that it was working on “a plan” to use gold reserves to anchor the reintroduction of the dead Zim dollar.

In Tuesday’s surprise announcement, State media quoted Mines minister Walter Chidakwa saying that the government was working on “a plan to establish a gold reserve set to anchor the introduction of a local currency”, which would see the resurrection of the dead Zim dollar.

The plan, being modelled around the $200 million Afreximbank facility, which backs bond notes — and whose legal processes were already said to be before Parliament — had the ultimate aim of mitigating the country’s acute liquidity and cash crunch.

“Naturally, in order to support the future introduction of our own currency, you want to have mineral resources that you hold in reserve.

“We have discussed this matter with the Reserve Bank of Zimbabwe and what we are doing now, because most of the gold that is currently held is in private hands, we need to get our own companies operating,” Chidakwa told state media.

Chidakwa’s made the comments despite Reserve Bank of Zimbabwe governor John Mangudya consistently saying that market conditions were not right for the return of the Zim dollar anytime soon.

Speaking to the Daily News on Sunday yesterday, former Finance minister, Tendai Biti said Chidakwa’s comments “betrayed” government’s determination to reintroduce the decommissioned Zim dollar.

“I have no doubt that the Zimbabwe dollar is coming back, but it will be coming back in the context of a government that has totally failed to resolve and restore the economic fundamentals that are needed for a local currency.

“I will tell you this for a fact, there is not a single country that has ever dollarised and gone back to its own currency.

“This is because by adopting the United States dollar, there was institutional admission and a vote of no confidence in the Zimbabwe dollar. The trust is just gone,” Biti said.

“These zombies of void reasoning want to introduce toilet paper as money just to save their necks. But the conducive economic fundamentals are lacking.

“I have always said that if the country wants to go back to a local currency it should look beyond the multi-currency system and push for a monetary union within the region, where fiscal and monetary convergence is agreed upon,” he added. Daily