Zimbabwe is not ready to adopt a mono-currency due to insufficient foreign reserves and foreign debt management issues, as outlined by Finance Minister Professor Mthuli Ncube. He emphasized the need to meet specific financial benchmarks before making this transition.
Zimbabwe is currently unprepared to transition to a mono-currency, according to Finance Minister Professor Mthuli Ncube. He emphasized the need for specific financial conditions to be met before such a shift can occur. The government must ensure it possesses adequate foreign reserves to support the domestic currency, ZiG, particularly in the face of potential speculative attacks.
Professor Ncube highlighted that international standards require at least six months’ worth of imports to be covered by foreign reserves. This serves as a defense mechanism for the currency. He stated, “The question is whether there was any consideration for the mono currency. Not as yet. The reason being that you need certain conditions to be in place first before you adopt a mono currency.”
Another critical issue is the management of Zimbabwe’s foreign debt, which presents risks to the currency’s stability. The Minister called attention to the necessity of advancing the country’s debt clearance strategies. “Secondly, we need to make progress on foreign debt, which will also pose risks to the value of any currency. If you have arrears or high external debt, that will pose risk to your currency,” he underscored.
In summary, Zimbabwe’s move towards a mono-currency is contingent upon fulfilling significant financial prerequisites. Key among these are the establishment of sufficient foreign reserves and effective management of external debt. Without these measures in place, the transition remains unviable.
Original Source: allafrica.com
