'RBZ reserves inadequate'

New Reserve Bank of Zimbabwe (RBZ) governor John Mushayavanhu talking to journalists at the central bank in Harare on Thursday during a handover takeover process from his predecessor John Mangudya overseen by President Emmerson Mnangagwa who was also there to check the asset holdings - minerals and cash reserves in vaults.

Mushayavanhu, who will introduce a new structured currency today [Friday], says the RBZ has 1.5 tonnes of gold and 1 tonne of several other precious minerals, making it 2.5 tonnes.

This is worth US$175 million put together.

The central bank has US$100 million cash reserves, bringing the total to US$275 million.

This constitutes the cumulative reserves at RBZ to back the new currency.

While authorities claim this is more than enough to back up the new currency as it is above Zimbabwe's one month import cover, analysts say actually this is woefully inadequate to anchor the new local unit which will come against a backdrop of currency volatility and runaway exchange rate-driven inflation amid a renewed economic spiral into the doldrums of turmoil.

Zimbabwe has been reeling from economic problems for over two decades now.

Analysts also say the current reserves narrative is not much different from the US$200 million Afrexim Bank facility which authorities claimed was there to back the ill-fated bond notes.

Zimbabwe has had a labyrinth and many variations of the local currency decimated by the economic meltdown and high inflation in recent years.

The new currency, analysts say, will not survive without economic and structural reforms within the context of a lasting political settlement.