THE Zimbabwe Coalition on Debt and Development (Zimcodd) says fiscal discipline and citizen participation are key factors in stabilising the recently introduced Zimbabwe Gold (ZiG) currency.
The Reserve Bank of Zimbabwe (RBZ) recently launched the ZiG and scrapped the Zimdollar after it had significantly depreciated over the past few months. In the first quarter of the year alone, the Zimdollar depreciated by more than 260%.
ZiG has already been received with scepticism by Zimbabweans with many believing its value will soon be decimated by the continued demand for the US dollar, now commonly used by citizens as a store of value to hedge against inflation.
In a statement, Zimcodd called for increased fiscal discipline if the ZiG is to succeed.
“Zimbabwe has decided to back its currency with commodities and reserve currencies, which is good. The onus is now on the Treasury to live within its means primarily to allow the RBZ to adjust the supply of ZiG to maintain confidence in future gold convertibility,” Zimcodd said.
“The government must curb public resource leakages through corruption, review national projects and programmes to identify misplaced priorities, redirect expenditures to social sectors, and reform its long-term infrastructure financing models to reduce pressure on the fiscus.
“The RBZ, in particular and the government, in general, must reckon that citizen participation is a crucial element of good governance as it allows citizens to inform, evaluate, monitor and influence decisions that affect them daily.”
Zimcodd also noted that there was need for political will to support the swift implementation of 2024 monetary policy measures together with other critical sector-wide reforms for ZiG to succeed.
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The social justice watchdog advised the government to create ZiG demand through demanding payment of all government taxes and government services in the new currency.
“There is a need to create demand for the local currency to help prop its value against foreign currency. The government is the single largest buyer and seller of the economy’s goods and services.
“However, it must take a gradual approach to avoid the excessive creation of an unbacked ZiG, which fuels depreciation and inflationary pressures in the economy.
“Since the ZiG concept is based on anchor reserve assets, there is a need for increased transparency at the RBZ, such as independent auditing of gold reserves in vaults and timeous publication of vital monetary aggregates like reserve money.
“Transparency will foster better communication between RBZ and all its stakeholders, thereby reducing uncertainty, building trust and contributing to practical policy-making,” Zimcodd said while also imploring government to come up with a robust economic reform agenda by establishing a market-determined ZiG exchange rate, ending quasi-fiscal operations by the RBZ, tightening monetary policy, pursuing fiscal discipline and improving government revenue collection, expenditure management and public service delivery.
