Staff Reporter
Economists have voiced strong support for the country's newly launched currency, the Zimbabwe Gold (ZiG), saying that it is a turning point for Zimbabwe’s economy.
In a recent interview, economist Chitambara expressed cautious optimism about the potential of ZiG to address the longstanding issue of unsustainable money supply growth in the country.
"It's a new start from a new Governor, and we are cautiously optimistic that it could solve the problems of unsustainable growth in the money supply because the ZiG is going to be linked to reserves of gold and the United States dollars that the country has," Chitambara stated.
He elaborated on the mechanics behind the currency, explaining that any increase in ZiG supply must be backed by a corresponding increase in the country's gold reserves or its US dollar holdings. This linkage, according to Chitambara, should prevent uncontrolled expansions in the money supply.
Chitambara further commented on the commitments made by the new Governor of the Reserve Bank of Zimbabwe, John Mushayavanhu, emphasising the importance of adhering to the promises of avoiding passive fiscal activities, which have historically undermined economic stability.
"If Governor Mushayavanhu sticks to his word, there would be no more passive fiscal activities that the Reserve Bank of Zimbabwe would be doing, and if they do that, they will help to stabilise the economy," Chitambara added.
Addressing the broader implications of the new currency, Chitambara noted that controlling the growth of the money supply could also stabilise the exchange rate, a critical factor driving the country's high inflation rates.
Since the launch of the ZiG, Governor Mushayavanhu has consistently reassured the public and investors that the currency will remain stable, supported by robust gold reserves and strict fiscal discipline.
The introduction of the ZiG marks a pivotal moment for Zimbabwe’s economic landscape, potentially heralding a new era of monetary stability and fiscal responsibility. The success of ZiG could indeed pave the way for a more secure and prosperous economic future.
