HARARE – Zimbabwe's Central Bank governor on Thursday said the re-introduction of the Zimbabwe dollar will not be done immediately but in the medium to long term.
Gideon Gono, a close ally of President Robert Mugabe, spoke after the veteran leader told thousands of his Zanu PF supporters during the party’s election manifesto launch in Harare last Friday that he has been working confidentially with the Reserve Bank of Zimbabwe (RBZ) boss to introduce a gold-backed Zimbabwe dollar currency once he wins re-election in the July 31 poll.
In a statement on Thursday evening, Gono said discussions around this have been made with Mugabe, but said the re-introduction of a local currency would be done much later.
The country has allowed the use of multiple foreign currencies since January 2009 to stem hyperinflation which had rocketed to over 230 million percent and left the Zimbabwe dollar almost worthless.
“As monetary authorities, we advise that as per the announcement by His Excellency President R.G. Mugabe, the re-introduction of a local currency is rather a medium to long term aspiration than an immediate, near-term agenda item on our radar as the Central Bank,” Gono said.
“Essentially, it is every country’s desire to have its own currency in order to avail potent policy options to policy makers, and Zimbabwe is no exception in this case.”
Gono outlined five key conditions, including attainment of sustained macroeconomic stability and re-orienting the economy on a firm recovery trajectory, before the local currency bounces back.
Before the local currency is reinstated, Gono said there must be:
*The accumulation of adequate foreign exchange reserve buffers to the Sadc regional target of at least 3 months of import cover but said Mugabe wanted that threshold doubled.
*The rehabilitation of infrastructure notably roads, water and sanitation, telecommunications and energy.
*The restoration of confidence generally and banking sector stability in particular.
*The alignment of various pieces of legislation so that they complement each other.
*Rehabilitation and modernisation of necessary infrastructures, laws and administrative systems needed to successfully carry out the re-introduction assignment, together with appropriate pre-education and consultations with all those who need to be consulted internally and externally.
Gono said the above pre-conditions can be feasibly attained in the medium to long term.
“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,” he said.
“Importantly too, is the fact that the 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.
“This means that government would need to purchase from gold miners, adequate stocks of gold in order to build its bullion reserves.”