ZIMBABWE’S gold-backed currency, the Zimbabwe Gold (ZiG) has lost its status as a legal tender as the law which introduced the currency lapsed on October 4, a top lawyer has said, in a fresh setback to the six-month-old local unit.
The ZiG, the country’s sixth attempt to introduce a stable currency in 15 years, has been mired with boobs since it debuted in April following the demonetisation of the Zimdollar.
Top lawyer Advocate Thabani Mpofu said on Saturday the ZiG was operationalised by the promulgation of the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Zimbabwe Gold Notes and Coins) Regulations, 2024 which lapsed after six months.
“By law, a statutory instrument promulgated in terms of the Presidential Powers Act lapses at the end of 6 months unless prior to its lapse, the instrument is validated by primary legislation,” Mpofu wrote.
“For these reasons, the ZIG is no longer legal tender. The consequences are immense. I think we have a big problem on our hands. (I sincerely hope for the life of me that the authorities did the needful. If they did not, this needs to be fixed by the only lawful way available).”
NewsDay can reveal that government has been working on legislation to support the introduction of the ZiG in preparation for the lapse of the SI after six months.
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Finance Bill H.B. 8, 2024 amends the principal legislation to accommodate the introduction of the ZiG.
According to the Bill, ZiG notes and coins shall be deemed to have been prescribed by the Minister in terms of section 44D (2) of the principal Act.
The Bill passed through Senate about two weeks ago and requires President Emmerson Mnangagwa’s signature to become law.
A legal expert yesterday told NewsDay that all those challenges could have been avoided if government had not taken a “lackadaisical approach” on issues that have deadlines.
“Once the Bill sailed through Senate someone should have alerted the President to sign it into law and avoid these unnecessary pressures,” the lawyer said.
The Bill, the lawyer said, is key as it comes up with legislation on the payment of quarterly corporate income tax in ZiG.
During the launch of the ZiG in April, central bank governor John Mushayavanhu said the currency would be in high demand as companies scrounge for it pay quarterly taxes in June. The second quarterly payment date was on June 25 in which companies paid 10% of their corporate income tax.
According to Mushayavanhu, government would make it compulsory for companies to pay half of the QPD tax in local currency which would have shored up the ZiG. However, the process required an amendment to the Finance Act which is contained in the Bills that sailed through the Senate.
As there was no legislation to compel companies to pay half of their corporate income tax in ZiG, another opportunity was missed during the third QPD on September 25 when companies paid 30% of the quarterly taxes.
“The inertia shows that government is sabotaging the ZiG,” an expert said last night.
“A country that wants to promote the use of a local currency under the de-dollarisation roadmap should not be making these schoolboy blunders.”
There were fears last night that people would refuse the ZiG in transactions which would complicate matters.
“What will government do if shops refuse accepting the ZiG? We are skating on thin ice and the sooner we act, the better,” an economist said.
Former Finance minister Tendai Biti concurred that ZiG was no longer a legal tender.
“Advocate Thabani Mpofu is 100% correct. ZiG is no longer a currency because the six months have lapsed. So, Parliament must amend the the Reserve Bank of Zimbabwe Act for the ZiG to become a currency not the President,” in reference to an abandoned plan that would have led to the amendment of the Constitution to extend Mnangagwa tenure beyond 2028.