OPPOSITION leader Nelson Chamisa has slammed the government's plans to introduce a currency board, in another attempt to resuscitate the ailing Zimbabwe dollar, saying it will suffer a stillbirth.
Earlier this week Finance Minister Mthuli Ncube said the government was considering introducing a currency board to save the local currency which continues to tumble.
The currency board will link the exchange rate to hard assets such as gold.
Chamisa said the board will be one of many failed measures by the government to give life to the local currency.
"The currency crisis Zimbabwe faces is a crisis of CONFIDENCE. This confidence deficit crisis can't be addressed by setting up a currency board or establishing a structured currency framework. This is why previous efforts which include the introduction of bond notes, gold coins and ZIG failed dismally.
"Regarding the asset-backed currency, I must express deep skepticism. This strategy is a rehash of previous failed attempts. The introduction of gold-backed digital coins and gold coins has already proven ineffective, leading to the discounted sale of gold and contributing to the smuggling of precious resources out of our country. Moreover, the lack of transparency surrounding this process only fuels suspicion and undermines public trust," said Chamisa.
He said the government lacks the wherewithal to make the proposed plan a success.
"As for the proposed currency board, my assessment of where this has happened successfully shows that the success hinges on accountability, transparency, and adherence to legal instruments--qualities sorely lacking in Zimbabwe's current governance. The pervasive state policy inconsistency erodes confidence in the system's integrity. Without these critical success factors in place, the currency board is doomed to fail.
"For avoidance of doubt, I know that currency boards have been used in over 38 countries with notable success because of the "confidence effect" especially in circumstances where credible people of integrity and high standing were appointed to the board.
"I am also aware that currency boards work well in circumstances where the central bank holds sufficient foreign which will match demand for foreign currency at a pegged exchange rate," said Chamisa.
The currency board is the latest strategy by the treasury to stabilise the local currency which continues to depreciate with the majority of Zimbabweans preferring the United States dollar.
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Earlier this month President Emmerson Mnangagwa said the government would establish a "structured currency" which will tame Zimbabwe's runaway inflation.
Chamisa said the country needs wide and far-reaching political and economic reforms.
"Our situation is so dire because it is characterized by a confidence deficit, exogenous shocks (drought & subdued commodity prices) which have a net effect of depleting our forex will weaken the effectiveness of the so-called structured currency and currency board.
"It's clear that they are resorting to ineffective fiscal and monetary policies as the economy continues to suffer from currency leakage and a lack of value generation, exacerbated by the refusal to implement a single currency status and abandon the flawed interchange auction system.
"Instead of tinkering with ineffective superficial solutions, Zimbabwe needs genuine comprehensive political and economic reforms that prioritize accountability, transparency, and the rule of law. Only then can we build a stable and prosperous economy for everyone," he said.
