Zimbabwe Introduces New Currency, The ZiG
The Reserve Bank of Zimbabwe (RBZ) Governor John Mushayavanhu has announced the introduction of a new currency, ZiG (Zimbabwe Gold), which will be backed by a basket of foreign currencies, gold and other precious metals.
Presenting the 2024 Monetary Policy Statement (MPS) this Friday, 05 April 2024, Mushayavanhu said the notes are coming in denominations of 1, 2, 5, 10, 50 and 100. Coins are for half and a quarter ZiG.
Mushayavanhu told a press conference in Harare that the ZiG would be launched on April 8 at an introductory rate of 13.56 per dollar and a new interest rate set at 20%.
He said Banks will convert their current Zimbabwean dollar balances into the ZiG. Said Mushayavanhu:
We want a solid and stable national currency in this country. It does not help to print money. Certainly, under my watch, it is not going to happen.
According to Bloomberg, the introduction of ZiG is Zimbabwe’s sixth attempt to have a functional local currency since 2008, when inflation crossed 500 billion per cent, according to International Monetary Fund estimates, rendering it worthless.
The current Zimbabwean dollar has lost four-fifths of its value on the official market since the start of the year, making it the world’s second worst-performing currency.
The depreciating currency has led to more than 80% of transactions being done in dollars and inflation quickening to 55.3% in March from 47.6% the prior month.
Mushayavanhu said the inflation rate is expected to decline from 2% to 5% by year-end as a result of the currency changes. He added:
We are not going to be involved in any quasi-fiscal activities. I have no intention of doing other people’s jobs.
Monetary policy statement highlights:
- Structured currency to be backed by reserves and royalties
- ZWL dollar currencies are to be converted to ZiG
- ZiG to circulate alongside other currencies.
- Multi-currency system is to stay until 2030 as per the law.
- All obligations are to be converted to ZiG.
- All banks are to accept old notes for the next 21 days.
- ZiG notes 1, 2, 5, 10, 20, 100 200
President Emmerson Mnangagwa has promulagated the Statutory Instrument to operationalise the ZiG. Statutory Instrument 60 of 2024 as follows:
Presidential Powers (Temporary Measures) (Zimbabwe Gold Notes and Coins) Regulations, 2024
ARRANGEMENT OF SECTIONS
Section
1. Title.
2. New section inserted in Cap. 22:15.
3. ZiG notes and coins deemed to be prescribed by section 44D of Cap. 22:15.
4. Design of ZiG notes.
5. Form and colour of ZiG notes.
6. Conversion of existing Zimbabwe dollar balances into ZiG balances and swap of Zimbabwe dollar banknotes and coins. 7. ZiG to be unit of account for transactions previously denominated in Zimbabwe dollars.
8. Amendment of section 22G of Cap. 23:04.
9. Amendment of section 36G of Cap. 23:06.
10. Amendment of Thirtieth Schedule to Cap. 23:06.
11. Saving provision.SCHEDULE: Design, Colour, Size and material of One ZiG, Two ZiG, Five ZiG, Ten Zig, Twenty ZiG, Fifty ZiG, One hundred ZiG and Two hundred ZiG banknotes.
WHEREAS a situation has arisen affecting the economic interests of Zimbabwe that cannot be dealt with adequately in terms of any other law;
AND WHEREAS, because of the urgency of the situation, it is inexpedient to await the passage through Parliament of an Act to deal with it;
AND WHEREAS such a situation has arisen in connection with the need to stabilise prices and the exchange rate by the introduction of a domestic currency backed by foreign exchange reserves, precious metals and valuable minerals;
ZiG to be unit of account for transactions previously denominated in Zimbabwe dollars
7. For the purposes of section 44D of the principal Act as inserted by these regulations, the Minister shall be deemed to have prescribed that, with effect from the date of promulgation of these regulations (the “effective date”), for accounting and other purposes (including the discharge of financial or contractual obligations), all assets and liabilities that were, immediately before the effective date, valued and expressed in Zimbabwe dollars, shall be deemed to be values in ZiG at rate as converted in terms of section 6(1).
Amendment of section 22G of Cap. 23:04
8. Section 22G (“Intermediated Money Transfer Tax”)(d) of the Finance Act [Chapter 23:04] is amended by the deletion of “(ZIG)”.
Amendment of section 36G of Cap. 23:06
9. Section 36G (“Intermediated money transfer tax”) of the Income Tax Act [Chapter 23:06] is amended in the definition of “Zimbabwe gold-backed digital token” by the deletion of “or “ZIG”.
Amendment of Thirtieth Schedule to Cap. 23:06
10. The Thirtieth Schedule (“Intermediated Money Transfer Tax”) to the Income Tax Act [Chapter 23:06] is amended-
(a) in the heading by the deletion of “ZiGs” and the substitution of “Zimbabwe gold-backed digital tokens”;
(b) in subparagraph (1) by the deletion of “(ZiGs)”.Saving provision
11. The gold coins and Zimbabwe gold-backed digital tokens that are issued by the Reserve Bank in terms of section 7(d)(i) and 47(3) of the Reserve Bank Act and are in circulation on the date of these regulations shall continue in circulation after that date and remain as investment assets redeemable in accordance with terms and conditions determined by the Reserve Bank.
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