THE Reserve Bank of Zimbabwe (RBZ) has said the reserves backing the Zimbabwe Gold (ZiG) currency have risen to US$980 million as it targets US$1 billion by year-end.
This underscores the work RBZ has done since unveiling the ZiG in April last year.
At launch, the ZiG was backed by reserves of US$285 million.
Monetary authorities seek to increase the reserves backing the ZiG ahead of the adoption of a monocurrency regime in five years.
Government will this month announce a roadmap towards a monocurrency regime as it seeks to end the multi-currency system.
Statutory Instrument 218 of 2023 extended the life of the multi-currency regime until December 31, 2030.
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There are also concerns the government wants to impose the local currency without taking on board the input of key stakeholders such as business member organisations.
The business sector says it is in the dark as it has been told to wait for the roadmap to be unveiled by Finance minister Mthuli Ncube this month.
This comes at a time when the government is claiming that the monocurrency journey will be market driven.
There is anxiety on the market amid calls by experts that the economy is not yet ready to use the local currency as the sole legal tender.
Banks have adopted a cautious approach, offering loans with maximum tenures of three years.
The sector has been burnt before during currency reforms.
This has deprived the economy of long-term loans, especially in the property sector where mortgages have all but vanished.
What is clear is that the government is determined to pursue a de-dollarisation path in which the ZiG will be the sole legal tender and has set tough conditions precedent to achieving the monocurrency thrust.
It said the monocurrency regime would occur when there is durable macro-economic stability, characterised by low and stable inflation at single-digit levels.
Annual inflation dipped to 32,7% in October from 82,7% in September. Monetary authorities project that inflation will reach single-digit levels next year.
Some of the conditions precedent include adequate foreign currency reserves of at least three to six months import cover in the medium to long-term and an efficient forex management that promotes ease of access to forex by exporters.
There must be stable exchange rate dynamics with minimum over- or under-valuation of ZiG.
It has also set one of the conditions as increased demand for the ZiG.
There must be financial sector stability, an efficient and secure national payments system to promote ease of payment in ZiG locally.
The government has identified fiscal and monetary policies cohesion with non-monetisation of the budget.
This all sounds good. The whole process needs confidence as a currency.
The world over, confidence makes or breaks a currency.
Zimbabweans have travelled that road before where it was dribbled by the government.
The nation was told that a bond note was equal to a United States dollar and one would change it later if one doesn’t need the bond note.
Years later, the government said the two were not the same.
No amount of statistics will make citizens forget overnight the daylight robbery they suffered at the hands of the government.
Confidence in a currency comes if the government consults and allows the market to lead the process.
The government has shown so far that it is not keen to consult. It wants to foist it on the people.
History has shown that currency reforms foisted on the people fall spectacularly.