ZIMBABWES NEW CURRENCY

Two hands holding the ZIMBABWES NEW CURRENCYZiG, short for Zimbabwe Gold, was introduced on the 5th of April—the sixth effort in 25 years after six failed attempts to overcome poor foreign exchange values and hyperinflation and stabilise the economy.

Unlike its predecessors, ZiG is backed by gold and precious metals, as Central Bank Governor John Mushayavanhu announced. ZiG would be structured to be set at a market-determined exchange rate. It replaces the Zimbabwean dollar (RTGS), which this year had declined by three-quarters of its value. Annual inflation had reached 55% in March, which was a seven-month high.

Banks had to convert current Zim dollar balances instantly to Zig, whose note denominations range from 1 to 200. Coins will also have to be replaced, given the US coin shortage.

Zimbabweans, who were given 21 days to exchange old notes for ZiG, were lukewarm about the new money. At present, the US dollar is used for 58% of deals, and many prefer that this be retained. The people’s distrust of the Central Bank dates back to 2008 when it printed Z$ 10 notes, and inflation was crippling the economy. This was followed by the abolishment of the Zim currency, leading to the use of foreign banknotes such as the US dollar and the South African rand.

This development has been introduced at a time of serious drought,  which has affected the staple maize.

In 2016, a new currency—bond notes—was created backed by the US dollar loan facility, which the then-Central Bank Governor John Mangudya said would remain on par with the US dollar. However, this failed when the government again printed excess money. The new Governor has promised there will be no overprinting. Critics insist the government has to adhere to discipline and live within its means.