Former Minister of finance and Public Accounts Chairman Tendai Biti has revealed that government will introduce a local currency this week which is backed by nothing as the value of the local bond note continues on a free fall on the parallel market.
Posting on his microblogging site,Twitter, Biti said “The regime will this week introduce a new Zimbabwe currency not backed by any reserves and without any structural reforms which are prerequisite of currency reform…”
He called the move pure madness and futile, and described the new currency as another form of the bond note but with a different name to it.
“…that move is pure undiluted insanity. An unbanked currency is just the bond note by another name,” said Biti.
Biti’s comments, however, contradict what Finance Minister Mthuli Ncube said earlier this year.
President Emmerson Mnangagwa, also told this publication that the finance ministry and the Central bank were busy building reserves to back the local currency.
“The local currency can only be introduced once reserves are in place,” Mnangagwa told this publication.
Zimbabwe adopted the multicurrency system in 2009 after the Zim babwe dollar was rendered useless by hyperinflation. In 2016 government later introduced the bond note, a surrogate currency as a way to ease cash shortages and also to incentivise exports.