Zimbabwe’s Finance Minister Mthuli Ncube has dismissed concerns that Government’s decision to pay suppliers exclusively in Zimbabwe Gold (ZiG) could trigger inflation, arguing that strict monetary controls are now in place.
Speaking on the policy shift, Ncube said past inflationary pressures were largely driven by excess liquidity in the market — a situation he insists no longer applies.
“What used to happen in the past is that we had excess liquidity sloshing around. This time we don’t,” he said.
The Government recently announced that public sector suppliers and contractors will be paid solely in ZiG, a move aimed at boosting demand for the local currency and strengthening its stability.
Ncube emphasized that the Reserve Bank of Zimbabwe (RBZ) is maintaining tight control over money supply, ensuring that the amount of ZiG in circulation remains limited to prevent inflationary pressures.
Economists have previously warned that injecting local currency into the market without adequate controls could weaken exchange rate stability and drive-up prices. However, authorities argue that improved fiscal discipline and coordinated monetary policy will mitigate such risks.
The policy forms part of broader efforts by Government to anchor confidence in the ZiG and gradually increase its usage across the economy, while maintaining price and exchange rate stability.
