ZiG adjustment stabilises prices, claims Mthuli Ncube

The recent adjustment of the exchange rate between the Zimbabwe Gold (ZiG) currency and the United States dollar has successfully stabilised market prices, Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, announced yesterday.

Speaking at the official opening of the Ministry's Strategic Review and Planning Workshop in Mutare, Prof Ncube hailed the Reserve Bank of Zimbabwe's (RBZ) measures, including the devaluation of the ZiG, as key steps in restoring economic stability.

The central bank's decision to devalue the ZiG currency was aimed at narrowing the gap between the official exchange rate and the parallel market rate, which had been causing inflationary pressure. According to Prof Ncube, the move has provided much-needed relief to the retail sector, which had been grappling with fluctuating exchange rates.

"In order to address high inflation, exchange rate, and currency volatility experienced during the first quarter of 2024, Government, through the RBZ, introduced the ZiG currency in April 2024 to replace the Z$. This new structured currency has resulted in significant price and exchange rate stability," said Prof Ncube.

He went on to explain that the devaluation of the local currency last week was a necessary step to align the official exchange rate with market realities. "The devaluation helped stabilise prices in the market and cushion players in the retail industry," Ncube said, adding that ongoing discussions with suppliers and retailers highlighted the positive impact of these measures, though some challenges remain.

Contrary to concerns raised by some economists questioning the Government's confidence in its own currency, Prof Ncube asserted that the Zimbabwean government continues to support the ZiG. He revealed that 50% of the country's revenue is now collected in the local currency, further cementing the government's commitment to promoting its use.

"To support the ZiG, Treasury has directed that companies pay at least half of their second quarter taxes in local currency. As I speak, we are receiving 50 percent of our domestic revenues in the local currency. This will go a long way in promoting the use of our currency and demonstrating confidence in it," he said.

Prof Ncube also took the opportunity to clarify Zimbabwe's economic ambitions, refuting misconceptions about the country's progress toward becoming an upper-middle-income economy by 2030. "Zimbabwe is already a middle-income economy, and our goal is to transition from lower to upper-middle-income status. We are on a long journey to rebuild the country and implement policies that improve the living standards of our people," he noted.

He further emphasised the government's focus on attracting investment to foster economic growth, reinforcing the administration's mantra, "Zimbabwe is open for business."

The one-week workshop in Mutare, where Prof Ncube delivered his keynote address, is expected to provide key strategies for boosting Zimbabwe's economic growth as the Ministry of Finance reviews its policies and plans for the coming years.