ZIG performs well in its first two weeks on the market

◆ From Page 4 salt and soap has shifted from tuck shops into the retail shops using ZiG.

This signifies a shift in demand from USD to goods in the shops. It is therefore not surprising that the USD/ZiG rate on the parallel market has fallen to 16-17 in the last two weeks while on the WBWS market the rate has gained to now 13,2545 over the same period (Now 21 percent premium).

This also follows the firming of gold on the international market.

The strengthening witnessed above is expected to continue into the medium term especially as we draw closer to the QPD submissions around June. Of the U$80 million worth of ZiG currently in issue, the payment of QPDS is anticipated to raise the demand for ZiG to about $150 million implying a foreseen shortage of ZiG of about U$70 million. It is wise to hid the call by the Governor to “Hold on to your ZiG”.

An argument has also been proffered for the collection of all taxes in ZiG as a measure of support for the new currency. This argument makes sense although it has to be well timed and scheduled. Imagine collecting all VAT payments in local currency that will create a need of about US$4 billion!

There is simply not enough ZiG for that at present and that action risks crushing the market. I believe Government must therefore provide a clear road map over which eventually this target can be met as that is the ultimate goal. In addition, it is my considered view that the well meaning MPS now in place requires further clear support from the fiscal side.

While the tax collections have commenced on QPDs, I propose that the Treasury either issues a detailed supporting statement which may even mean presenting a new budget for the year instead of the nation waiting for a supplementary budget.

In conclusion, a fresh dawn has now been ushered in with the new currency and every reason points to its success. I strongly believe many questions in the market psych are now being answered. The market though now waits for the stability of the currency and the current shopping pattens will be reinforced again and again in each of the next three months.

When customers return to the shops and find the same prices, the confidence levels on the currency will begin to build up

◆ Misheck Ugaro. Past Vice President and now Council Member Zimbabwe Economics Society. Misheck is a financial economist with major interest on macroeconomics