RESERVE Bank of Zimbabwe (RBZ) governor Gideon Gono has allayed fears of a hurried return of the now defunct Zimbabwe dollar saying prospects for the re-introduction of the local currency are medium to long term.
Report by Taurai Mangudhla
Gono yesterday told the Zimbabwe Independent the country and the business community should not panic as the move remains no more than an aspiration that is still at consultation stage.
He said discussions had been held between his office and President Robert Mugabe’s office on the return of a local currency, whose name may not necessarily be the Zimbabwe dollar. He also said the local currency will only come back after an enabling macroeconomic environment has been created.
Gono said among the agreed preconditions needed are sustainable macroeconomic stability, accumulation of adequate foreign exchange reserve buffers to the Sadc regional target of three months and rehabilitation of infrastructure.
Mugabe understands the local currency, Gono added, will only return upon restoration of confidence in economy generally and in the banking sector in particular and alignment of various pieces of legislation and administrative systems so that they complement each other prior to its re-introduction, together with appropriate pre-education and wide consultations.
“The above pre-conditions can be feasibly attained in the medium to long term, and only then has the president directed that we can as monetary and fiscal authorities, timely devise ways of re-introducing the local currency,” Gono said.
“Additionally, the local currency according to the wishes of His Excellency, would be required to circulate alongside the basket of currencies which are currently legal tender in Zimbabwe and the public will be free to pick and use a currency of their choice for transactions purposes.”
The central bank chief said sustained stability of the re-introduced local currency will also be contingent upon the accumulation of adequate assets from the country’s resources, notably gold, to enable the currency to be fully gold-backed. To achieve this, Gono said, government would need to purchase adequate stocks of gold from miners in order to build its bullion reserves.
Last week, Mugabe said the Zimdollar will eventually return but not immediately.
Debate on the return of the local currency comes as banking sources indicate Finance minister Tendai Biti is on the verge of gazetting a statutory instrument which will, among other things, seek to demonetise (stop use of) the Zimbabwe dollar.
As reported by the Zimbabwe independent last week, sources said Biti wanted to gazette the legal instrument and demonetise the defunct local currency.