Audits of ZiG money supply once a year: RBZ

ZIMBABWE should use its own currency to achieve higher levels of economic growth while the supply of the Zimbabwe Gold (ZiG) will always match increases in gold and cash reserves, with audits of money supply expected to be conducted at least once a year, Reserve Bank of Zimbabwe Governor, Dr John Mushayavanhu, has said. 

In addition, negotiations involving stakeholders are underway to explore the possibility of selling fuel in ZiG as part of measures to boost and promote its use.

Dr Mushayavanhu said this when he appeared before a joint sitting of Parliament’s Portfolio Committee on Budget, Finance, Economic Development and Investment Promotion, and Industry and Commerce on Tuesday.

The RBZ chief announced the introduction of the ZiG, which is mainly backed by the country’s gold and foreign currency reserves and other minerals, when he presented his first Monetary Policy Statement nearly two weeks ago.

“We are still negotiating and making considerations on how best we can allow the sale of fuel in ZiG,” he said.

“We started on taxes and included other commodities and people are going to be advised. 

“We need to do our work gradually and we are going to reach that (point) where fuel is sold in ZiG.

“For a country to grow, you need to transact in your local currency and we are starting at 15 percent and we expect to grow that to 30, 40, 50 percent or even higher by 2026.”

Dr Mushayavanhu also told the MPs that an annual audit of reserves would be done with findings publicised to ensure the Central Bank sticks to its policy pronouncements.

“We will have an audit once by registered auditors, be it international firms or local ones,” he said.

Dr Mushayavanhu added that the Central Bank was also open to increasing the frequency of the audits following questions from legislators.

“We can do that if Honourable Members want that although it would be ideal to have one audit a year so that the auditors retain their independence,” he said.

Dr Mushayavanhu reiterated that the Central Bank will not print money that does not correspond to reserves it holds.

“Any increase in money supply will be met by a concomitant increase in reserves and will also be linked to productivity, inflation and other variables and I can assure the public that we will stick to that,” he said.

At the moment, Zimbabwe has US$80 million worth of ZiG in circulation backed by US$100 million in cash and US$185 million worth of gold reserves.

Government has also directed that companies pay 50 percent of their taxes in ZiG to promote its economy wide use.

Dr Mushayavanhu said the Intermediate Money Transfer Tax, commonly referred to as the 2 percent tax that is presently pegged at 1 percent for US dollar transactions and 2 percent for ZiG transactions, would soon be brought to parity between the two currencies.

Monetary authorities have also agreed with Treasury to scrap the provisions of SI 118A allowing traders to charge goods and services at a rate of up to 10 percent of the official rate amid concerns by legislators that this was also fuelling parallel market rates.

Treasury is expected to make pronouncements on the matter soon. –The Herald