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Govt critic slams introduction of Zimbabwe's new 'structured currency'

by Staff reporter
03 Apr 2024 at 08:53hrs | Views
Prominent economist Gift Mugano has dismissed the government's proposed introduction of a "structured currency" as merely a repetition of past unsuccessful endeavors. This move is seen as the latest effort by the Treasury to salvage Zimbabwe's struggling economy, which is currently experiencing a downward trend.

According to reports by Newshawks, the new currency is expected to be announced by outgoing Reserve Bank Governor John Mangudya this Friday. Mangudya has recently been replaced by seasoned banker John Mushavanhu, who officially assumed office last week. The new central bank governor is anticipated to unveil policy measures aimed at addressing the rapidly escalating inflation and the depreciation of the Zimbabwean dollar.

In an interview with NewZimbabwe.com, Mugano outlined several inherent flaws in the government's approach. When questioned about whether the structured currency could alleviate the currency crisis, Mugano emphatically responded with a "no," challenging the belief that the new currency would bring stability. He pointed to the failures of previous initiatives, such as gold coins, gold tokens, and the bond note backed by the African Export–Import Bank (Afreximbank).

Mugano criticized the government for employing fancy terminology without offering any genuinely innovative solutions. He asserted that the proposed measures are merely a rehash of previous approaches and are unlikely to address the underlying issues. Mugano attributed the currency crisis in Zimbabwe to factors such as lack of production, investment, and savings.

He emphasized the importance of addressing these fundamental issues, stating that a country's currency strength is directly linked to its production capacity. Mugano highlighted the need for savings and investments to stimulate economic growth. He also suggested that a change in leadership could help restore confidence and encourage people to deposit their money in banks.

However, another economist, Prosper Chitambara, viewed the proposed development positively, considering Zimbabwe's history of hyperinflation. Chitambara welcomed the government's efforts to stabilize the currency and the macroeconomy. He stressed the importance of implementing comprehensive reforms across monetary, fiscal, and institutional policies to instill confidence and foster sustainable economic growth.

Source - newzimbabwe