Mystery Surrounds Zimbabwe’s Gold Reserves Amid Currency Plans
5 April 2024
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By A Correspondent| In a startling revelation, Zimbabwe’s Reserve Bank Governor, John Mushayavanhu, has announced that despite the nation boasting 2.5 tonnes of gold reserves, the central bank holds a mere 1.5 tonnes in its vaults.

The whereabouts of the remaining gold remain shrouded in mystery, raising concerns about the fate of the precious resource in a country grappling with economic instability.

Speaking at a press conference, Mushayavanhu disclosed that of the total gold reserves, 1.5 tonnes are stored domestically, with the remaining one tonne purportedly held offshore. However, questions linger over the transparency and accountability surrounding the handling of the nation’s prized mineral wealth.

Economic commentator Professor Gift Mugano cast doubt on the adequacy of Zimbabwe’s gold reserves to support the introduction of a structured currency.

Mugano highlighted that the combined gold reserves and cash holdings, estimated at US$291.8 million, fall significantly short of the necessary reserves to ensure currency stability.

“2.6 tons of gold & US$100m (i.e., US$291.8m equivalent) are a drop in the ocean. Here is the simple mathematics: If we combined 1.1 tons of gold (local) and 1.5 tons of gold (offshore), we have 2.6 tons of gold. If we use the price of gold per ounce of US$2294 as of yesterday, our 2.6 tonnes of gold gives us an estimated value of US$191.8m. Our total reserves are estimated at US$ 291.8 million if we factor in the additional US$100 which has been announced by the RBZ. This year, we are anticipating to import goods worth US$9 billion, that is, US$750m per month. Our reserves (2.6 tons + US$100m) = US$291.8m can only cover 11.7 days of the month if we are not exporting anything. In short, our reserves are not enough to give us at least one month of import cover. Basic economic theory tells us that we must have at least six (6) months of import cover to guarantee currency stability if all things are equal. This is a priori requirement. In our case, we have approx 1/3 month cover! This is not enough to support the structured currency even if we will still receive forex inflows from exports, diaspora remittances, credit,” said Mugano.

Moreover, concerns escalated as George Guvamatanga, the Permanent Secretary for Finance, Economic Development, and Investment Promotion, disclosed that the Treasury holds an additional US$300 million in reserves, separate from the central bank’s holdings.

The revelation underscores the opacity surrounding Zimbabwe’s financial management and raises questions about the discrepancy between reported reserves and actual holdings.

The discrepancy between reported gold reserves and the actual quantities held by the central bank has sparked speculations about potential mismanagement or illicit dealings involving the nation’s prized mineral wealth.

As authorities press forward with plans to introduce a new currency, the lack of transparency surrounding Zimbabwe’s gold reserves casts a shadow over the nation’s economic prospects, prompting calls for greater accountability and oversight.