- ZiG Notes, a new currency in Zimbabwe, are scheduled for rollout
- The government has established withdrawal limits for ZiG Notes to manage the initial circulation
- The move aims to address hyperinflation and restore stability in the country's economy
Harare- Zimbabwe's central bank, the RBZ, has announced the withdrawal limits for the new currency, Zimbabwe Gold (ZiG), which will enter circulation on April 30, 2024.
To ensure a controlled initial rollout, weekly cash withdrawal limits have been set at ZiG3000 for individuals and ZiG30000 for corporates.
Different limits have been established for various entities: schools, hospitals, clinics, and local authorities will have a monthly limit of ZiG250000, while government ministries and departments will have a limit of ZiG300000.
Notably, there are no specified limits for cash withdrawals by Parliament, courts, and international organizations.
All banknotes and coins of ZiG have been produced locally and are backed by precious minerals, particularly gold, with a value of US$185 million and reserves of US$100 million.
The aim of introducing ZiG is to address the hyperinflationary environment that Zimbabweans have been experiencing since 2000.
Achieving this goal requires the financial authorities to exercise monetary prudence in managing the demand and supply dynamics between ZiG and the available foreign currency reserves.
For this to work also, Zimbabwe should promote local production in order to reduce its import bill, which has resulted in significant losses due to the importation of basic commodities such as sugar, cooking oil, mealie-meal, and even tissue paper, primarily from South Africa.
To support this objective, stringent laws should be enacted to regulate the importation of locally produced basic products by larger companies such as National Foods, Hippo Valley, and other prominent producers.
For the "Buy Zimbabwe" campaign to succeed, production costs for these companies need however, to be reduced. This can be achieved by lowering electricity costs, streamlining tax burdens, and implementing measures that discourage passing on costs to the final consumer.
It is also crucial for Zimbabweans to develop trust in their government's ability to effectively manage finances and the currency.
Conversely, the government should demonstrate its trustworthiness by accepting ZiG payments for essential services such as fuel, passports, licenses, and various taxes.
The objective is to create demand for ZiG by ensuring that it can serve the same purposes as the US dollar.
To achieve this, the government should issue a directive requiring fuel companies to accept ZiG payments, rather than relying solely on encouragement.
As long as ZiG remains limited in its acceptance for key payments, people will continue to seek the US dollar, which is not readily available in banks and fuels exchange rate volatility on the black market.
Addressing this issue requires implementing policies aligned with the aforementioned suggestions, rather than relying solely on law enforcement.
The government, particularly RBZ Governor John Mushayavanhu, should learn from the failure of the US$200 million backed Bond Notes, which were not sustainable due to fiscal mismanagement.
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