daniel chigunwe
Mukudzei Chingwere
Herald Reporter
Zimbabwe is not yet fully prepared to a shift towards mono-currency as it still has to meet various financial imperatives, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube has said.
He outlined critical issues that must be met before a mono currency can be considered, including adequate foreign reserves to support the domestic currency, the ZiG, in the event of speculative attacks.
Prof Ncube pointed out that international benchmarks exist, including the ability to cover six months of imports without further influxes.
“The question is whether there was any consideration for the mono currency. Not as yet. The reason being that you need certain conditions to be in place first before you adopt a mono currency,” said Prof Ncube.
“First of all, you need to be sure that you have adequate foreign reserves to defend the domestic currency, the ZiG, if ever it comes under speculative attack. There are certain rules and benchmarks around the world such as six months … so that you will then be able to cover six months of imports without needing further flaws. Really, it’s about being able to defend the currency,” said Prof Ncube.
Additionally, he stressed the importance of addressing the country’s foreign debt clearance, which poses risks to the value of any currency.
Minister Ncube reiterated the need for progress in the debt clearance programme.
“Secondly, we need to make progress on foreign debt, which will also pose risks to the value of any currency. If you have arrears or high external debt, that will pose risk to your currency,” said Prof Ncube.
“So, again we need to make sure that in our arrears clearance programme, we make progress towards clearing those.”
Online Reporter