Latest news with #MthuliNcube
Business Insider
4 days ago
- Business
- Business Insider
Zimbabwe's gold-backed currency faces credibility test despite central bank optimism
Zimbabwe's gold-backed currency, the Zimbabwe Gold (ZiG), continues to face skepticism from both the public and financial analysts, despite central bank assurances of stability and full reserve backing. Zimbabwe's gold-backed currency, the Zimbabwe Gold (ZiG), faces public and financial analyst skepticism Past economic issues, including hyperinflation and currency shifts, continue to erode public trust in new currency measures. The share of transactions using the ZiG has increased, though many citizens still rely on the U.S. dollar due to past economic turmoil. The Reserve Bank of Zimbabwe (RBZ) claims the currency is supported by more than 100% in reserves, including 2.5 tons of gold and $100 million in foreign assets. The ZiG, Zimbabwe's sixth currency attempt in 15 years, was introduced to curb inflation and restore confidence in the local monetary system. Yet many citizens still rely on the U.S. dollar for daily transactions, with past economic turmoil continuing to erode trust. Although the International Monetary Fund has expressed support for the ZiG and its potential to become a full national currency, uptake remains limited. Government efforts to boost usage have yet to overcome deep-rooted doubts among both consumers and investors. According to Reuters, the RBZ kept its benchmark interest rate at 35% on Monday, citing exchange rate stability. It also reported total reserves of $701 million and noted that the share of transactions using the ZiG jumped to 43% in May, up from 26% in April when the currency was launched. The Zig's credibility issues Last year, Zimbabwe introduced a new gold-backed currency known as the ZiG, or Zimbabwe Gold, in a bid to curb longstanding currency instability and decades of hyperinflation. The Zimbabwe Gold (ZiG), has however, continued to face a significant trust gap, as evidenced by persistent premiums in the parallel market, where it trades below the official rate. This skepticism persists despite the central bank's assertion that the ZiG is now backed by more than 100% in reserves, comprising gold and foreign currency. The country's tumultuous monetary history, marked by hyperinflation and abrupt currency shifts, has contributed to this lack of confidence. While responding to Reuters, Reserve Bank Governor John Mushayavanhu reaffirmed the central bank's commitment to the ZiG, stating: ' ZiG is our national currency, and we are committed to ensuring its success by maintaining all the fundamental characteristics of sound money, including its function as a reliable store of value. ' He added, ' The Reserve Bank has learned from previous currency failures that maintaining an optimal money supply and ensuring monetary stability is vital. ' Finance Minister Mthuli Ncube remains optimistic, expressing confidence that monetary reforms will pave the way for $2.6 billion in bridge financing by mid-2026. However, global investors are cautious, with Jetro Siekkinen of LGT Capital Partners stating, " We wouldn't invest in Zimbabwe at the current stages. The country needs to have a lot more development before we would consider it," as reported by Reuters. Analysts have also raised concerns about Zimbabwe's overall reserve position, noting that the country holds just 0.8 months of import cover, well below the International Monetary Fund's three-month benchmark. Other factors include past policy failures, doubts over gold reserve transparency, limited convertibility, and persistent inflation which all fuel skepticism. A strong black-market presence and continued reliance on U.S. dollars further weaken confidence.
DW
10-06-2025
- Business
- DW
Is Zimbabwe on the right track to economic growth? – DW – 06/10/2025
06/10/2025 June 10, 2025 Zimbabwe has rolled out some reforms and programs to stabilize its economy. Key among them is the new ZiG Currency. So, has the policy chalked up any successes? And what are the implications for inflation control, debt resolution, and arrears clearance? Zimbabwe's Minister of Finance Mthuli Ncube talks to DW's Josey Mahachi on these and other issues
DW
04-06-2025
- Business
- DW
What's behind Zimbabwe's debt crisis gold gamble? – DW – 06/04/2025
06/04/2025 June 4, 2025 Zimbabwe's latest effort to stabilize its economy comes in the form of the Zimbabwe Gold (ZiG), a gold-backed currency introduced in April 2024 to combat hyperinflation, restore confidence and address mounting debt. However, the ZiG has rapidly lost value on the parallel market. DW's Josey Mahachi speaks with Zimbabwean Finance Minister Mthuli Ncube.
Business Insider
02-06-2025
- Business
- Business Insider
10 rich countries non-committal on Zimbabwe's $2.6b bridge financing appeal
Zimbabwe is yet to secure any firm pledges of financial support from the 10 countries it appealed to in its ongoing bid to settle long-standing debt arrears. Zimbabwe is actively seeking financial support from 10 nations to address its $21 billion debt burden. The country has been unable to access global financial markets since its default in 1999. Zimbabwe has requested $2.6 billion in bridge financing to address debts to international lenders. Zimbabwe is yet to secure any firm pledges of financial support from the 10 countries it appealed to in its ongoing bid to settle long-standing debt arrears. The southern African nation is burdened with a $21 billion debt, which has shut it out of global financial markets since it defaulted in 1999, according to Bloomberg. According to Finance Minister Mthuli Ncube, he had sent letters to Algeria, Brazil, China, France, Germany, Italy, Japan, South Africa, the United Arab Emirates, and the UK, requesting $2.6 billion in bridge financing to help settle debts owed to major multilateral lenders, including the World Bank, the European Investment Bank, and the African Development Bank. However, responses from the countries Zimbabwe approached for debt relief have been mixed. "Some of them are very warm, some of them not so warm. You will get a varied response,' he said. One of the major hurdles to securing the bridge financing is that seven of the countries he contacted, including China and Germany, are already creditors to Zimbabwe. Collective support needed Given the large amount of funding Zimbabwe is seeking, it's unlikely that a single nation will step in as a sponsor. Ncube stressed that it would require a collective effort of at least three countries. He also noted that Zimbabwe may explore other avenues to raise funds for debt repayment, including asset sales, though he did not offer specifics.
Bloomberg
30-05-2025
- Business
- Bloomberg
Rich Nations Courted by Zimbabwe Non-Committal on $2.6 Billion Bridge Finance
Zimbabwe hasn't received any concrete commitments of financial support from 10 nations it appealed to for help in its long-standing efforts to clear debt arrears. 'Some of them are very warm, some of them not so warm,' Finance Minister Mthuli Ncube said Friday in an interview in Abidjan, the commercial capital of Ivory Coast, where he is attending the annual meetings of the African Development Bank. 'You will get a varied response.'
