The Zimbabwe Congress of Trade Unions (ZCTU) has criticized the Reserve Bank of Zimbabwe for unilaterally devaluing the Zimbabwean Gold (ZiG) currency without considering its impact on workers and ordinary citizens.
In a statement issued on Tuesday, October 1, ZCTU Acting Secretary General Kudakwashe Munengiwa said the ZiG has been devalued by over 44%.
He said this devaluation has reduced workers’ earnings, leaving them financially vulnerable, especially as many shops charge double prices for ZiG transactions.
Munengiwa condemned the government’s reluctance to engage with workers and businesses through the Tripartite Negotiating Forum (TNF), in violation of Section 13(2) of the Constitution, which mandates the government to involve citizens in development plans that affect them. He added:
<blockquote>
We would like to note that RBZ has been taking people for granted for quite some time now when introducing a new currency.
When it introduced the bond notes in 2016 RBZ claimed that the bond notes were adequately backed by lines of credit from Afreximbank and that the 1:1 exchange rate between the USD and RTGS$ were also backed by adequate lines of credit.
Lately, they also claimed that the ZiG was adequately backed by gold. These all have proved to be false guarantees as the local currency could not hold against the USD and other foreign currencies.
</blockquote>
Munengiwa said the government’s fiscal mismanagement and high inflation have significantly contributed to the devaluation of the ZiG, urging the government to take responsibility for the currency’s decline.
He asserted that workers are now earning in a rapidly depreciating currency that fails to fulfil basic economic functions, adversely affecting their earnings, pensions, and insurance.
Munengiwa urged employers to pay a substantial portion of wages in USD to support workers.
He also called on the government to establish a minimum wage in USD to protect vulnerable workers and ensure fair compensation to combat poverty and reduce inequality, including gender disparities.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Pindula News

The ZCTU is unhappy with the RBZ for reducing the value of the ZiG currency by 44%, making it harder for workers to earn enough money. The government didn't talk to workers first, which is not fair. The RBZ has made false promises about the currency in the past. The government needs to take responsibility for the currency losing value. Workers should be paid in USD to help them. The government should also set a minimum wage in USD to ensure fair pay and reduce poverty.

ZCTU Slams RBZ For Unilateral Devaluation ZiG Currency

Economic commentator Gift Mugano has warned the Reserve Bank of Zimbabwe (RBZ) against floating the exchange rate without adequate foreign currency reserves.
Mugano said the move by Zimbabwe’s central bank on Friday, 27 September, to liberalise the ZiG currency is “suicidal” adding that the RBZ “just put nail on the ZiG coffin.” He said:
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In our instance, I think we are now at a deeper end. We are in the middle of the storm, that we have adopted a local currency, we do not have enough reserves and we are supposed to liberalise.
So, it’s like committing suicide and again if you don’t liberalise you are still committing suicide again. We need to go back to the drawing board and say how do we address this.
</blockquote>
Instead of liberalising the exchange rate, Mugano suggested that the RBZ should scrap the ZiG, return to USD mono-currency, and introduce the ZiG when the time is ripe – when the right fundamentals are in place.
A Harare-based economist, who declined to be named for professional reasons, told <a href="https://www.businessweekly.co.zw/gold-backed-currency-fails-to-stem-zims-economic-challenges/">Business Weekly</a> that liberalisation and maintaining controls present significant risks, and “there is no easy solution.” Said the economist:
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The Reserve Bank of Zimbabwe is facing a daunting task. Liberalising the foreign exchange market could lead to hyperinflation while maintaining controls could exacerbate shortages and inefficiencies.
The Government must carefully consider the potential consequences of both options.
A poorly executed liberalisation could have disastrous consequences for the economy.
The best solution for Zimbabwe may lie in a gradual and carefully managed approach to liberalisation, combined with targeted measures to address the underlying causes of economic instability.
</blockquote>
On Friday, September 27, the central bank devalued the ZiG by over 40% against the US dollar, changing the exchange rate from 14.1 ZiG per dollar to 24.3 ZiG per dollar.
However, the RBZ has not clarified whether the currency will float freely or if it will continue to control the exchange rate after the devaluation.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Economic expert Mugano warns that Zimbabwe should not float the exchange rate without enough foreign money. He thinks doing this is like killing the ZiG currency. Mugano suggests Zimbabwe should go back to using USD only and bring back the ZiG later when everything is ready. Another economist says liberalizing or controlling the exchange rate both have risks. Zimbabwe needs to be careful and make smart decisions to avoid making things worse. The central bank devalued the ZiG by 40% on September 27, but it's not clear if they will let it float freely or control it.

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