Zimbabwe, set to launch gold-backed currency, builds 2.5t of reserves in 18 months

By bne IntelliNews April 5, 2024

Zimbabwe has 2.5 tonnes of gold reserves and $300mn in cash, according to senior government officials, speaking on the eve of the anticipated rollout of a new gold-backed currency.

Incoming Reserve Bank of Zimbabwe (RBZ) governor, John Mushayavanhu told President Emmerson Mnangagwa during a tour of the bank's vaults on April 5 that 1.5t of the gold is being kept locally while a tonne is being held offshore. The gold and other precious minerals such as diamonds that are in reserve are worth $175mn.

“Over and above that, I have also confirmed the cash balances, nostro balances held by the central bank, and I can confirm that there is $100mn worth of foreign currency balances in cash,” he said, The Herald reported on April 5.

The southern African nation started, from September 2022, collecting 10% of gold royalties in the form of physical gold. Platinum and lithium royalties are converted into gold.

Mnangagwa visited the RBZ a day before it launched a new currency, which, he said recently, would be backed by gold. The national currency, reintroduced in 2019, has been decimated by hyperinflation since then. 

The government has made many attempts to shore it up including introducing gold coins and a weekly currency auction; and clamping down on street currency traders. Bloomberg estimated in late March 2024 that the Zimbabwe dollar had lost 70% of its value since January 2024.

Amid the currency crisis, more than 70% of all local transactions are now being undertaken using the greenback. 

Permanent secretary in the finance ministry, George Guvamatanga, said in addition to the parcel at the central bank, treasury has $300mn in reserves, which, all combined, is more than one month import cover.

“And at least if you allow me, your excellency, just for today to mention that as government of Zimbabwe, in various banks in Zimbabwe, not even in the central bank, and in private banks, we have got $300mn over and above this $275mn [the total value of the precious minerals and cash reserves at the RBZ],” he said.

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