Mthuli Ncube summoned over ZiG

FINANCE minister Mthuli Ncube has been summoned to Parliament to explain how the Zimbabwe Gold (ZiG) currency introduced on Friday will work.

Legislators also want Ncube to amend the Finance Act to operationalise ZiG after authorities dumped the worthless Zimdollar.

The Zimdollar that was introduced in 2019 was on a free-fall, battered by hyper-inflation.

Opposition Citizens Coalition for Change Marondera Central Member of Parliament Caston Matewu on Tuesday said Ncube must explain the currency changer-over and its implications.

"We expect the Minister of Finance to come to this house and explain how the new currency is going to work and also explain if they are going to amend the Finance Act," Matewu said.

"It is important for him to explain the Finance Act because if the new currency is going to work the common denominator must be confidence."

Matewu said this was necessary to boost confidence in the local currency.

"The citizens must be confident with their own currency. We need to know if the Finance Act is going to put everything in local currency and every government service must be in ZiG including fuel," he said.

Ordinary Zimbabweans and some businesses are sceptical about the new currency.

Some businesses are refusing the Zimdollar even after authorities said the local unit would remain in use until April 30.

Critics have also raised dust after authorities continued pricing of some products and services such as fuel in United States dollars.

The Zimbabwe Energy Regulatory Authority (Zera) yesterday said it had not received communication from government and the central bank to price fuel in ZiG to boost confidence in the new currency.

Zera chief executive officer, Eddington Mazambani, said they had not received communication to accept ZiG for fuel purchases.

"Issues of currency are dealt with by the central bank and the Ministry of Finance, Economic Development and Investment Promotion," Mazambani said.

"No communication, but fuel prices were approved in US$ post the introduction of ZiG."

In a statement, the Reserve Bank of Zimbabwe said the current US dollar-denominated fuel pricing regime shall remain in place despite locals being encouraged to embrace the new currency.

Critics said authorities must promote confidence in ZiG by ensuring that critical commodities  such as fuel are bought in local currency.

Economist Tom Hawkins said it would make a major difference if fuel stations would accept ZiG.

"The whole new currency caper is just an attempt to disguise the revaluation of the Zimdollar by giving it a new name and claiming it's backed by gold. When you get some ZiGs try asking the bank to exchange them for gold," Hawkins said.

Economist Vince Musewe said: "This basically means that nothing much will change when it comes to fuel purchases. I think this should be a free market where fuel suppliers choose the currency they prefer. Clearly, they still prefer US$."

But economist and a member of the central bank's monetary policy committee Persistence Gwanyanya said it was unrealistic to expect fuel to be exclusively pegged in ZiG.

"Change does not happen overnight. The situation in the country is that we have got limited ZiG which hopefully will be injected in line with the reserves," Gwanyanya said.

"This adaption to ZiG will happen gradually. The market will be squeezed as we go towards the Quarterly Payment Date. As they get squeezed, they will liquidate the US$ and our reserves increase."