Chronicle EditorSikhulekelani Moyo, [email protected]
THE sustained macroeconomic stability being experienced in the economy since the introduction of the Zimbabwe Gold (ZiG) currency demonstrates the Government’s commitment to consolidating domestic economic growth and fostering business viability in the long term, economic analysts have said.
The Reserve Bank of Zimbabwe (RBZ) introduced ZiG in early April as part of a raft of policy interventions to address exchange rate volatility, curtail inflation and restore macroeconomic stability.
Backed by precious minerals, mainly gold and a basket of foreign currency reserves, ZiG has remained firm against the US dollar hovering around US$1:ZiG13,5 with more business stakeholders embracing its use.
Economist Mr George Nhepera said so far ZiG has defied the odds as it has stabilised prices of goods and services, especially basic grocery items.
He said ZiG has also managed to tame parallel market volatility whose rates have equally remained stable with a narrow negligible disparity when compared to the official rate.
“Slowly but surely the new currency is assuming its primary function of being a medium of exchange and a store of value, while the previous ‘old currency’ had serious challenges,” said Mr Nhepera.
He said the Government should now come up with measures to sustain the prevailing stability and the need to resuscitate the mortgage market using the new currency as a way to empower communities towards house ownership and decent accommodation.
“ZiG will be here to stay for an unforeseeable future, hence making it a suitable currency for long-term mortgage lending,” Mr Nhepera said.
He, however, stressed the need to improve the availability of US dollars in local banks for ordinary consumer exchange using ZiG held by corporates to facilitate imports of critical raw materials.
Another economist, Dr Prosper Chitambara, said the country has been witnessing macroeconomic stability since the introduction of ZiG.
He urged the authorities to stick to prudent monetary policies and fiscal consolidation to instill discipline in the market and curb speculative financial behaviours.
“The economy has relatively been experiencing macroeconomic stability as evidenced by inflation numbers for May where there has been a significant decline in the numbers and also exchange stability,” said Dr Chitambara.
“The economy cannot play a sustainable role and develop without stability hence it’s critical to sustain this stability through continuing with the macro-economic formal agenda.”
Official data already indicates that the month-on-month inflation rate for May 2024 was 0,1 percent, shedding 0,7 percentage points on the April 2024 rate of 0,8 percent.
Since the introduction of ZiG, some sections of the Bulawayo manufacturing industry are witnessing increased business activity with executives stressing the importance of its stability for the economy’s growth.
Experts say relying on foreign currency as the base currency for trade would hinder economic growth, as it would lead to an influx of cheap imports that may overshadow locally manufactured products.
Bulawayo businessman Mr Morris Mpala also commended the continued market stability and called for close monitoring of wayward economic actors to deter artificial volatility.
He said the Government should now continue with inflation targeting benchmarked by regional peers that are below double-digit figures while monitoring and curtailing money supply that could spiral the rate of exchange on the market.
“Gradually introduce bureau exchanges to cater for forex needs for family consumptions, which include, but are not limited to, travel, medical and rentals.
“Intricately bring the fuel sector and home affairs into the ZiG economy. Re-visit banking models to encourage banking by economic actors,” said Mr Mpala.
He also urged the Government to fight corruption aggressively and fund infrastructure development from long-tenure funds.
-@SikhulekelaniM1
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