Zimbabwe: MPs Demand Explanation From Mthuli Ncube Over Devaluation of Gold-Backed ZWG

WEDZA North MP Itai Ndudzo on Tuesday demanded that Finance Minister Mthuli Ncube present a ministerial statement addressing the devaluation of Zimbabwe's new gold-backed currency, ZWG.

The currency introduced in April lost over 40% of its value last week following pressures from the market for the RBZ to adopt a realistic exchange rate.

Ndudzo, who also chairs the Parliamentary Legal Committee, raised his concerns during a point of national interest this week.

The legislator asked Ncube to clarify why a currency purportedly backed by gold would experience such a steep devaluation at a time when global gold prices are increasing.

"It is imperative for the Hon. Minister of Finance to bring a ministerial statement before this august House to explain the serious incongruity: how is it that a gold-backed currency devalued by 44%, even though the price of gold per ounce has seen a phenomenal increase in global markets?" Ndudzo said.

The ZWG's devaluation is despite the rise in gold prices from US$2,350 per ounce in April to US$2,648 per ounce in September, raising questions about the backing and stability of the ZWG.

He further stressed that Ncube must outline the interventions being implemented by both monetary and fiscal authorities to protect Zimbabweans, particularly vulnerable groups like pensioners, war veterans, and civil servants.

These groups, many of whom are paid in local currency, were the hardest hit by the abrupt devaluation.

Ndudzo emphasized that urgent steps must be taken to restore confidence and safeguard the savings and income of ordinary Zimbabweans.

"Zimbabweans need clarity on the measures being taken to create demand for our local currency in all domestic transactions and the roadmap being pursued towards the ultimate goal of having our local currency as the sole legal tender in Zimbabwe," Ndudzo added.

At its launch, the ZWG was pegged at a rate of 13.54 ZWG to US$1, with the RBZ governor, John Mushayavanhu, assuring citizens that the currency would be fully backed by reserves, including gold and foreign currency.

Marondera Central MP, Caston Matewu, echoed Ndudzo's sentiments.

"I had intended to raise the very same issue," Matewu said, supporting the call for Minister Ncube to urgently address Parliament and explain the sudden collapse of the currency.

The ZWG devaluation had shaken confidence in Zimbabwe's currency system yet again, adding to the country's long history of failed currency experiments over the past two decades.

Meanwhile, President Emmerson Mnangagwa is expected to deliver his State of the Nation Address (SONA) this Wednesday, during which the currency crisis is likely to take centre stage.

This article originally appeared in New Zimbabwe.