New Currency/Notes: Who should we believe, Mangudya or Mthuli?

By Staff Reporter

Zimbabweans find themselves at crossroads, unsure whether to believe Reserve Bank of Zimbabwe Governor John Mangudya or Finance Minister Mthuli Ncube on the currency issue.

Mangudya had told the media at a press conference that the country will be introducing a new currency that will circulate alongside the Bond Notes, however, his announcement was quickly rubbished by Ncube a few hours later.

“Let us be clear this is not a new currency, we already have a new currency which is the Zimbabwean Dollar.

“All that is practically happening is a cash injection that is absolutely needed to ease the cash shortage and reduce transaction costs for accessing cash.

“It will also reduce prices because we have noticed that whenever you are using cash the prices are substantially lower,” he said.

Policy inconsistency has been previously cited as one of the bottlenecks in Zimbabwe that have put-off potential investors who are badly needed to help rescue the deteriorating economic situation.

These new measures were once announced by economist Eddie Cross but were however dismissed by the government.

According to Ncube, there is no issue of inconsistencies adding that the country already had a legal currency that was put in place on the 24th of June 2019 by the RBZ Statutory Instrument 142.

The new notes or money is coming in denominations of $2 and $5 a development which has not gone down well most people who were already calling for higher denominations of Bond Notes to ease the burden of carrying huge quantities of cash.

However, the Finance Minister defended the small denominations adding that it is meant to deal with issues of divisibility and easier access to change.

Economist Prosper Chitambara, however, criticised the idea of adding more cash into the economy without addressing issues of production and confidence adding that it will create uncertainty in the market.

“Introducing more cash in our situation is not sustainable and actually inflationary because you will increase the money supply when production is decreasing.

“This will result in more money chasing after a few goods which will further worsen the situation,” he said.

However, Albert Makochekwana an economist and lecturer at the University of Zimbabwe applauded the move adding that it will ease the cash situation in the country.

“The significant impact injecting more money will have is to ease cash shortages and curb the illicit practice of cash agents selling cash at exorbitant percentages.

“Injecting more money in the economy will eliminate unjustified price disparities between electronic and bond notes in the market,” he said.

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Daniel Chigundu

Daniel Chigundu is the news editor for OpenParlyZW an online platform that covers Parliament of Zimbabwe activities using social media (Twitter and Facebook). He is currently the secretary-general of the Zimbabwe Parliamentary Journalists Forum and a board member of Digital Communication Network.

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