Zimbabwe News

Gift Mugano: Structured currency will not address currency crisis

Economist Professor Gift Mugano has broken his self-imposed silence on Zimbabwean economic matters, and this time he dismisses the government’s proposed “structured currency” as merely a revival of previously unsuccessful initiatives.

In January this year, Mugano said he would no longer comment on Zimbabwean economic matters after he was repeatedly labelled an “anti-economic progress” person by ZANU PF.

However, in an interview with NewZimbabwe.com, Mugano pointed out several fundamental weaknesses of the government.

In response to inquiries about whether the structured currency could mitigate the currency crisis, Mugano emphatically rejected the idea, asserting that the new currency would not contribute to stability.

Mugano underscored the shortcomings of past endeavours, including gold coins, gold tokens, and the bond note supported by the African Export–Import Bank (Afreximbank). He said:

Does the structured currency help us to address the currency crisis, the answer is no, and that is the V11.

Why didn’t these gold coins, gold tokens succeed in guaranteeing stability? Then why is a bond note that is backed by AFRI-EXZIM bank failed to guarantee 1:1?

So there is nothing new about what they are talking about, they are just regurgitating the same things they are doing vocabulary nice terms but in reality that is just nothing.

They are not going to be launching anything new, the problems are going to continue full stop.

Mugano asserted that the solution to Zimbabwe’s currency crisis is increased production, investments, and savings. He said:

We have solutions there are measures, the first thing which we need to address is that a currency is dependent on production, so if you don’t produce as a country you can’t defend the currency.

So the strength of the currency in any country is a reflection of the country’s production capacity, so the big elephant now is what do we need to do to raise production, we need savings and investments because the savings are identical to savings.

So then the second question is why do you need to have savings? If you are not saving you have no money you can’t create creation, in 1996 the savings GDP ratio was 25 per cent right now we are in negative 11% because the people are not saving money, right?

Online publication, The Newshawks, reported the new currency will likely be launched by outgoing Reserve Bank governor John Mangudya this Friday.

Mangudya was officially replaced by John Mushavanhu who officially took over last week.

Back to top button