World Bank Distances Itself from ZiG Fiasco
THE World Bank has subtly distanced itself as the driving force behind introduction of Zimbabwe’s new currency.
It says it only offers policy advice to several countries, member states like Zimbabwe who have the prerogative or discretion to choose a currency of their choice.
This was in response to Reserve Bank governor John Mushayavanhu’s claims that ZiG was the brainchild of the Bretton Woods institution.
Mushayavanhu claimed that the World Bank was central to the ZiG initiative through consultancy.
Now he is backtracking under pressure saying the World Bank was not the architect of ZiG.
On 5 April, the apex bank introduced the Zimbabwe Gold (ZiG), the country’s new currency which effectively replaced bond notes and the RTGS.
During the introduction of ZiG, Mushayavanhu said the new currency would be backed by foreign currency and gold reserves.
Speaking at a post-monetary policy review breakfast meeting in Bulawayo recently, the central bank chief said monetary authorities had limited knowledge about a structured currency.
“We didn’t know much about a structured currency. We got a consultant from the World Bank. A lot of the things you’re seeing about the structured currency actually came from the World Bank.
“So, if you’re going to blame me, you’re actually blaming the World Bank. Maybe they didn’t advise us properly. And if they did not advise us properly, it’s fine. Let’s refine it.”
World Bank Distances Itself from ZiG Fiasco
Research by The NewsHawks revealed that, there was no literature relating to “structured currency” found on either the World Bank or International Monetary Fund websites suggesting that this could be a novel currency.
A World Bank spokesperson told The NewsHawks that while the multilateral lender offers policy advice to countries such as Zimbabwe, member states remained autonomous on key policy decisions.
The World Bank said in a written response:
“We are committed to supporting the government of Zimbabwe in its efforts towards the country’s economic recovery. This aligns with our goal to create a world free of poverty on a livable planet.
“This support includes technical expertise and in-depth research and analysis on sectors, such as the latest Zimbabwe Economic Update.
“It also includes perspectives on policy and development challenges at the request of clients. Governments tailor this advice to their contexts and ultimately make the final decisions on policy implementation in their countries.”
Contacted to comment on whether or not the IMF had played any role in the introduction of Zimbabwe’s new currency, a spokesperson said the fund was still assessing the impact of the domestic currency on the economy.
A Washington DC-based IMF communications officer said in a written response to The NewsHawks:
“The selection of a particular exchange rate regime is the prerogative of the country authorities. The IMF’s role is primarily to advise on whether the country’s economic circumstances and its policy stance are consistent with the exchange rate regime that has been selected.
“In this context, we stand ready to advise the Zimbabwe’s authorities on policies to restore macroeconomic stability, but we need time to review the design and implications of the new currency arrangement.”
