The Zimbabwe Coalition on Debt and Development (Zimcodd) has highlighted the importance of fiscal discipline and citizen participation in ensuring the stability of Zimbabwe’s new currency, the Zimbabwe Gold (ZiG). The Reserve Bank of Zimbabwe (RBZ) decided to replace the rapidly depreciating Zimdollar with ZiG, as a response to the extreme devaluation that saw the Zimdollar lose more than 260% of its value in just the first quarter of the year. However, the public has expressed skepticism, and the US dollar remains the dominant currency in local transactions.
ZiG aims to provide a more stable and reliable monetary unit, but its success depends on the government’s ability to implement strict fiscal measures and involve its citizens in the currency’s governance.
Zimcodd has proposed several strategies to promote the acceptance and functionality of ZiG. One of the key strategies is to enhance fiscal discipline. The coalition suggests that the government should avoid excessive spending and focus instead on backing its currency with solid commodities and reserve currencies. By doing so, the RBZ can regulate the supply of ZiG effectively, which will help maintain public confidence in its convertibility to gold.
The organization also emphasizes the importance of minimizing public resource leakages, particularly those caused by corruption. It calls for a critical review of national projects and programs to identify and correct misallocation of resources. It urges a redirection of funds towards vital social sectors, which is essential not only for economic stability but also to ensure that infrastructure financing models do not overly strain the national budget.
Furthermore, Zimcodd highlights the necessity of reforming the government’s fiscal management practices. This includes establishing a robust economic reform agenda that involves setting a market-determined ZiG exchange rate, ending quasi-fiscal activities by the RBZ, tightening monetary policies, and enhancing the government’s revenue collection and expenditure management systems.
Zimcodd emphasizes the importance of citizen participation in the economic reform process. The organization argues that good governance involves allowing citizens to actively participate in policy decisions that directly affect their daily lives. This approach is crucial in building trust and accountability, which are essential for the successful implementation of the new currency.
In addition, to ensure the acceptance and stability of ZiG, the government is advised to require that all taxes and fees for government services be paid in ZiG. This strategy aims to increase demand for the local currency, which is vital for its value stabilization. However, Zimcodd warns against the rapid expansion of an unbacked ZiG supply, which could lead to further depreciation and inflation.
It is important to have transparency in the management of Zimbabwe’s gold reserves (ZiG) for its success. Zimcodd recommends that the Reserve Bank of Zimbabwe (RBZ) should commit to independent auditing of its gold reserves and timely publication of essential monetary aggregates. This transparency would reduce uncertainty and foster a more informed stakeholder communication environment, ultimately supporting effective policy-making.
In addition, it is important to have political will in swiftly implementing the 2024 monetary policy measures alongside other crucial sector-wide reforms. Without decisive action and commitment from the highest levels of government, the potential benefits of these reforms and the new currency itself could be significantly undermined.
To stabilize ZiG, a multifaceted approach is required that includes stringent fiscal discipline, enhanced transparency, citizen participation, and a commitment to comprehensive economic reform. By addressing these areas, Zimbabwe can hope to restore faith in its monetary policies and pave the way for a more stable economic future. These efforts are critical not only for the success of ZiG but also for the overall economic revitalization of Zimbabwe in an environment marked by skepticism and past economic challenges.
Source: Newsday
