No decision on gold mortgage as yet

Godfrey Marawanyika

ALTHOUGH gold level stocks have improved compared to 2003 levels the central bank says no position has been taken on whether to mortgage the yellow metal to offset the country’s domestic

and international debt.


German authorities recently proposed that the Bundesbank could mortgage some gold stocks.


Zimbabwe’s gold stocks have increased by 70% to produce 8 405,2 kilogrammes as at the end of last month.


Production has increased from 28 000 ounces of gold a month last year to a range between 56 000 and 72 000 during the first four months of this year.


“There are factors which mitigate against direct comparisons. However, without directly going into much detail we remain open on hearing how others are managing it. Firstly Germany is from the developed world and we are just a small developing country,” Reserve Bank of Zimbabwe governor Gideon Gono said.


“Germany is a country we hold in highest regards so is the Bundesbank. I would be interested to know more on how they are doing it or how they would do it but for tactical reasons we will not do that now.”


Government has so far mortgaged some of the country’s tobacco to settle its mounting international debt.


Zimbabwe has been battling to settle its foreign arrears since 1999.

The arrears, which have been accruing over the years, are owed to various multilateral and bilateral creditors, commercial and other credit suppliers.


Zimbabwe has been experiencing a hemorrhaging of gold over the past two years largely due to the unattractive pricing offered by the central bank.


Gold output has declined from a peak of 27 tonnes in 1999 to about 16 tonnes by the end of last year.


Gold producers can now sell up to 75% of their product at $71 000 if they choose to do so.


Alternatively they have an option to retain part of their earnings in foreign currency accounts.


Gold miners are now accessing the productive sector facility at concessional rates of 30% annually which has since enabled them to reduce working capital costs.


Zimbabwe’s Minister of Mines during the period under review was Edward Chindori Chininga.

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