Maravi

(HERALD) Zimdollar: Let’s not put cart before horse

Zimdollar: Let’s not put cart before horse

EDITOR — I welcome the decision by the Reserve Bank Governor Dr Gideon Gono to debate the idea of re-introducing the Zimbabwe dollar. I am against the reintroduction of the local currency at this stage after the economy has stabilised by the use of multiple currency.

The governor has suggested the linking of the Zimdollar to gold and other minerals. The name itself "Reserve Bank of Zimbabwe" implies that the central bank is different from other commercial or merchant banks because the reserve bank of any country should have "reserves", which are assets in gold and foreign currency a country keeps to prop up its currency.

I cannot remember a time when the governor ever revealed how much the country has in its reserves.

Zimbabwe used to produce at least 39 tons of gold per year by 1999, but this has gone down to about two tons a year. Why did we not keep the gold in RBZ coffers to support our currency?

Now that we do not have the gold, any suggestion that we support a new currency from the few ounces we have does not make sense.

I agree with Dr Gono that any currency must be supported by increased production of goods and the country needs gold and foreign currency reserves for it to be creditworthy if it wants to borrow money for its development. The reason being that of convincing the lenders that we will be able to pay back or what is referred to as having collateral.

The central bank governor had all the opportunity to articulate this fundamental concept of economics when the times were good.

At present, we have to continue to use the US dollar until a common currency is introduced by Sadc in 2012 as promised.

If we re-introduced the Zimdollar, we would go back to printing money to buy the US dollar with its black market consequences.

Let the people take time to produce goods to sell to obtain the US dollar and Government to collect taxes from increased economic activity to pay civil servants and meet its recurrent expenditure.

Let us be patient and methodical in building our economy. Rome was not built in one day.

Albert Nhamoyebonde.

Harare.

Labels: GIDEON GONO, ZIMBABWE DOLLAR

posted by MrK @ 3:51 PM