Economists Raise Concerns Over Efficacy of Structured Currency in Combating Zimbabwe’s Hyperinflation

As Zimbabwe anticipates the introduction of a new structured currency, economists caution that while it may diversify saving avenues for citizens, it may not sufficiently tackle the nation’s hyperinflation crisis. The crux of the issue lies in governmental manipulation of financial mechanisms. Scheduled for unveiling this Friday alongside the 2024 Monetary Policy Statement by Reserve Bank of Zimbabwe Governor, John Mushayavanhu, the proposed structured currency faces skepticism from economic experts.

Stevenson Dhlamini, an economist and lecturer at Bulawayo’s National University of Science and Technology, underscores the pivotal role of confidence in currency success. Dhlamini notes a lack of positive confidence in Zimbabwe’s financial sector among citizens, indicating a potential hurdle for the new currency’s acceptance. However, he acknowledges the stability exhibited by existing structured alternative financial assets like gold coins and Zimbabwe Gold (ZiG), suggesting a possibility of similar reception for the structured currency.

Dhlamini emphasizes that the ultimate impact of the structured currency remains uncertain until operational details are disclosed. He highlights its dual function as a medium of exchange and an asset, which could broaden saving options for ordinary citizens, provided it’s implemented transparently and with clear accountability measures.

Echoing concerns, economist Future Msebele warns against potential manipulation of the new currency by “saboteurs,” casting doubt on its effectiveness. Msebele advocates for full dollarization to stabilize the capital market, aiming to mitigate capital outflows and balance of payments crises.

Criticism extends to the coordination between monetary and fiscal policies, with calls for coherence and alignment between the two spheres. Bulawayo Mayor David Coltart underscores the paramount importance of rebuilding public trust in regulatory institutions for any currency reform to succeed, emphasizing transparency and professionalism as indispensable pillars.

In essence, while the structured currency proposal offers hope for economic stabilization, economists stress the imperative of addressing underlying issues of trust and policy coherence for lasting solutions to Zimbabwe’s hyperinflation woes.