The Zimbabwean Finance Minister, Mthuli Ncube, has ordered that government services be paid for in the local ZiG currency, part of new measures to boost demand for the nation’s gold-backed currency.
Ncube presented the measures in his mid-term budget statement before lawmakers on July 25 2024 in Mount Hampden, 11 miles northeast of the capital, Harare. The minister praised ZiG, short for Zimbabwe Gold, for subduing ‘inflationary pressures in the economy.’
The government was previously slammed for preferring to receive payment in U.S. dollars, a move seen as undermining its new currency, the ZiG. The stance has also partially been blamed for leading to the demise of the nation’s former currency, the Zimbabwean Dollar.
The Finance Minister also said he wants some taxes to be paid in ZiG, including:
- Custom duties on selected finished products
- Presumptive taxes, and
- aportion of corporate taxes
A crackdown, led by the central bank’s financial intelligence unit and police, to defend the ZiG from speculation on the parallel market will continue, he said.
“This exercise will continue until there is sanity and stability in the financial sector,” Ncube said.
So far, more than 500 traders and individuals have been fined for refusing to accept the ZiG, using, and engaging in illegal foreign-exchange rates and activities, Ncube said.
Zimbabwe replaced the Zimbabwean Dollar in April 2024 after it lost 80% of its value against the U.S. dollar this year [2024], fueling an inflation spiral. At launch, the ZiG was backed by cash and mineral reserves worth $285 million.
INTRODUCING | Zimbabwe Introduces Zim Gold, the New Currency Backed by Gold and Precious Minerals – https://t.co/ncKtxrEzpg
— Jack Straw (@JackStr42679640) April 8, 2024
The country now has $370 million worth of reserves in gold, increasing by 30% in the last 100 days, the Governor of the Reserve Bank of Zimbabwe announced recently.
[TECH] REGULATION | ‘We Are on a De-Dollarisation Journey,’ Says Zimbabwe Reserve Bank Governor as Gold Reserves Rise By 30% in 100 Days: According to the new Reserve Bank of Zimbabwe Governor, John Mush.. https://t.co/Ux5ViTmmsc via @BitcoinKE
— Top Kenyan Blogs (@Blogs_Kenya) July 17, 2024
Increasing reserves will allow the central bank to issue more ZiG currency moving it closer to its goal of reducing the country’s dependence on U.S. dollars.
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