Takavafira Zhou, the president of the Progressive Teachers Union of Zimbabwe (PTUZ), says civil servants are demanding payment of their salaries in US dollars, rather than the newly-introduced Zimbabwe Gold (ZiG) currency.
He is of the view that the ZiG is destined to fail due to its lack of convertibility across the Southern African Development Community (SADC) region.
Zhou told TellZim News that Zimbabwe is not yet ready to have a local currency due to low productivity in key sectors of the economy. Said Zhou:
We are not comfortable with salary payable in local currency unless it is acceptable in the region and at border posts as well as payable across other sectors in the government. If that is the case then it could be permissible to pay civil servants’ salaries in local currency.
Our perception and conviction is that Zimbabwe is not ready for a local currency and trying to pay civil servants in local currency would be tragic because very soon the local currency would show beyond any reasonable doubt that it is not applicable and is of limited longevity and applicability.
The long-term aspect is that we must continue to pay salaries in USD. The whole basis of paying in local currency is based on industrial recovery and balance between exports and imports, all other political rhetoric claims of a viable local currency have limited longevity and applicability and very soon indicators will show that the local currency is not viable.
Zhou said the Government should have confidence in its currency by regularising the payment of taxes and other government services in the ZiG currency. He said:
If the new ZiG currency is of value we must see the government regularizing payment of taxes and other government services in new currency but sadly the government has continued to demand the payment of lots of these services in USD. It is also doubtful the new currency will be used in the SADC region.
Our economy has become an enlarged supermarket for products from China, Botswana and South Africa. As long as the new currency cannot be used by traders to buy commodities from these other countries it will be of limited validity and applicability.
Government is not consistent in terms of policy formulation and application. This is an indicator of an oxymoron, if the government has confidence as they articulating that the new currency is stronger, they should then be systematizing and ensuring that taxes and other government services are done using the local currency.
Unless and until we produce, re-kit our industry and balance exports and imports it is doubtful that the new currency will stabilize or would be applicable because currency can only be backed by these factors.
Development economist Prosper Chitambara said the government should set a time frame on when citizens can be able to pay for other government services including fuel payments in ZiG. Said Chitambara:
Fifty per cent of the taxes are going to be paid using ZiG but with time there is a need to put a clear benchmark on when we will expect to pay for other government services in local currency and also including the payment of fuel but is something that must be done in a planned and systematic way but also in a gradual way within the framework of the country’s de-dollarization wherein we are expecting that by 2030 we should have reverted to the local currency.
It is important as it helps in terms of increasing the demand for the Zimbabwe Gold which will help the ZiG to stabilize and increase the value as demand increases.
There are arbitrage opportunities that have been caused by the differences in the exchange rate between the official and the black market rate.
If we can address that as I am hoping that we have liberalized that will help. The fact that demand for USD remains very high and the formal market may not probably be able to satisfy that demand and the black market will remain.
The challenge that we have is that even individuals who are renting out properties would not accept ZiG so there is a double standard; when they are paying for services whether it is local council rates they would want to pay in local currency because of the arbitrage opportunities as a result of the black market premium.
The Reserve Bank of Zimbabwe (RBZ) recently conceded that ZiG will not be recognized internationally, saying it will work to strengthen the currency to attain full convertibility.
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