The Reserve Bank of Zimbabwe (RBZ) Governor, John Mushayavanhu, said that the demand for the new currency, ZiG, will be huge by June 2024 when 50% of the Quarterly Payment Date (QPD) will be paid in local currency.
Speaking at the Zimbabwe National Chamber of Commerce (ZNCC) organised Monetary Policy Statement and Structured Currency review breakfast meeting held at a local hotel in Masvingo recently, Mushayavanhu said businesses refusing ZiG, such as fuel service stations, will stampede for the new currency.
Mushayavanhu advised companies that are not accepting the ZiG currency that a time will come when they will need the local currency to settle their tax obligations. He said (via The Mirror):
There has been talk that if ZiG cannot buy fuel, a passport and so forth then why should people want to have it?
We are in a multi-currency arrangement. The government has said from June all QPD payments are going to be made 50% in ZiG.
That step was taken to increase demand for ZiG because one problem that we identified before we came up with a Monetary Policy statement was that there was no demand for ZiG whatsoever.
What that is going to do is that come June there is going to be a huge demand for ZiG.
Mushayavanhu also stated that there is US$90 million worth of ZiG in circulation, while US$150 million worth of ZiG will be required for 50% of QPD. He added:
I am saying this to forewarn people that you may be the owner of a fuel garage in Masvingo and only sell your fuel in US$, it is fine but you are also going to pay tax in June, where are you going to get the ZiG? You are better off selling some fuel in ZiG so that come June you have ZiG in place.
When he launched the new currency on 05 April 2024, Mushayavanhu said the ZiG was backed by foreign currency and gold reserves. He told the ZNCC meeting:
We are starting with 2,5 tonnes of gold worth US$185 million, we also have US$100 million in our bank account versus US$90 million plus or minus worth of ZiG currency in circulation.
We are more than 3 times covered and that should be a good start. We have learnt from the past that any further increase in the amount of ZiG in circulation has got to be met by the increase of reserves.
The President has directed that any royalties paid by mining companies will be paid in kind to the Central Bank and used to build up reserves for the Central Bank and this is how we built the 2, 5 tonnes.
When we buy foreign currency from exporters, who are required to surrender 25% of it in exchange for ZiG, half of the money is sold back into the market and the other half, is split into two, 50 % goes to the Government to meet Government’s commitments in foreign exchange and the other 50% is used to build reserves of the Central Bank. Over time we will be building reserves.
Mushayavanhu said the Central Bank introduced the governor’s daily dashboard, “where every day at 4 PM I get an update on the amount of money in circulation, reserves and exchange rate and if anything is moving in the wrong direction, we quickly act so that it’s corrected”.
