New Zimbabwe currency to be backed up with fiscal discipline

Finance Minister Mthuli Ncube recently said that the new Zimbabwe currency will be backed up with fiscal discipline. According to Ncube, the government will allow the new Zimbabwe currency – Real Time Gross Settlement (RTGS) dollar; to fluctuate but would manage excessive volatility.

Zimbabwe’s Central bank have been slowly injecting dollars into some commercial banks so as to make cash available for businesses. In the past, absence of enough money in the system had resulted in the lack of many basic goods.

According to some economists and business executives, if Zimbabwe do not reduce borrowing, it could incite inflation and also an  cause an increase in black market for dollars. If this happens; then the foreign currency interbank market launched last week by the central bank will become redundant.

Last week Zimbabwe launched a new currency called  RTGS dollar. The new Zimbabwe currency trades at around around 2.5 RTGS to the 1 US dollar. However bankers are already criticizing that this rate is too low. To address the bankers’ concern, Ncube said the value is appropriate for now as it is only but the “initial trigger point”.

The new Zimbabwe currency RTGS Dollars consists of bond notes, bond coins and RTGS balances (electronic money).

The Zimbabwe government are also in talks with the International Monetary Fund to secure staff-monitored program and sufficient resources to meet salary increase demand by civil servants.

Zimbabwe President Emmerson Mnangagwa, said he hopes to drive the Zimbabwe economy back credibility and also to attract foreign investors.

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