Zimbabwe, which is experiencing a new episode of hyperinflation close to 200%, will put into circulation a gold coin this Monday in an attempt to curb the fever for the US dollar, accused of weakening the local currency. Called Mosi-oa-Tunya (“The smoke that thunders”) in reference to the spectacular Victoria Falls, a tourist attraction in the country, this gold coin is a refuge from another era, in the era of virtual currencies, judge economists interviewed by AFP that they believe will have little impact.
In Zimbabwe, the price of goods and services is set in US dollars, the currency of choice since the sky-high inflation of 2008, which had risen at rates of 500 billion percent. Currently, inflation reached 191.60% in June, compared to 131.70% in May. “The (new) currency will not have a significant effect on stabilizing the economy,” said economist Prosper Chitambara. “The US dollar will remain the preferred store of value,” he says, and many Zimbabweans are too poor to afford the gold coin.
22 carat coin
“It is a return to the 19th century, when we traded gold, we should focus more on digital finance,” criticizes his colleague Gift Mugano. Many also perceive this gold coin as a diversionary attempt by a failed government. “The idea is to occupy people’s heads and try to make it look like they’re doing something” in the face of the crisis, “that’s the problem when you have small heads sitting in big offices,” political scientist Takavafira Zhou jokes.
Each piece of 22 carats and about 31 grams will have a serial number. The buyer will take physical possession of it and will receive a certificate of ownership. It will be convertible into cash, Zimbabwean dollars or US dollars, and may be used as collateral for loans or lines of credit, according to the Central Bank. Its price will be indexed to the price of the international gold market.
Zimbabwe has been mired in a deep economic crisis for more than 20 years, which has caused, in particular, the withdrawal of international donors due to unsustainable debt.
Source: BFM TV
