Zanu PF politicians and their business have relied on money laundering schemes run by the Reserve Bank of Zimbabwe under the Basic Commodities Supply Side Intervention (BACOSSI) facility and they have suffered heavily in the last few months as a result of Gono’s inability to print money.
Finance Minister Tendai Biti said the Zimbabwe dollar can only be "introduced over his dead body".
He was reacting to proposals made by the Reserve Bank of Zimbabwe Governor Dr Gideon Gono who said the Zimbabwe dollar should be re-introduced anchored on gold valued by an independent body comprising all stakeholders. Gono said the re-introduction of the local currency would help in addressing a number of bottlenecks the country was facing.
The committee, chaired by Nkayi South Member of the House of Assembly Mr Abednico Bhebhe (MDC), wanted to know the financial sector’s preparedness in terms of introducing plastic money ahead of 2010 World Soccer Cup Finals to be held in South Africa. The committee invited the central bank and the Bankers’ Association of Zimbabwe, led by its president Dr John Mangundya, to update it on progress.
The committee, however, expressed concern at the unavailability of change, especially coins.
"Nobody can move me from that conviction. We anchor our Zim dollar to the gold available.
It will not only be RBZ, but all stakeholders. A certificate will then be issued to the RBZ on the amount of Zim dollar to be printed after the committee has satisfied itself on the value of the gold," said Dr Gono.
"You can also redeem your Zim dollar in return for an ounce of gold. Say, if you want to keep gold not cash, you can go to your bank and get an equivalent of ounces of gold to the Zim dollar you have, so we will be backing our money with reality on the ground. Such an approach is not inflationary because you are anchoring your money on productivity."
The central bank chief urged Zimbabweans to be pragmatic by "thinking outside the box". "We can even print gold coins. The Zim dollar can then gain as it is anchored on gold. We need to think outside the box," he said.
Meanwhile Zimbabwe’s month on month inflation rose to one percent in July from 0.6 percent in June, the Central Statistics Office (CSO) said Wednesday.
"The month on month inflation rate (monthly percentage change) in July 2009 was 1.0 percent gaining 0.4 percentage points on the June 2009 rate of 0.6 percent," the CSO said. "This means that prices as measured by the all items CPI increased by an average of 1.0 percent from June 2009 to July 2009."
The increase in inflation has largely been attributed to the rise in fuel costs,increase in transport fares, rise in the price of furniture and fittings and also the rise in the price of meat.
Zimbabwe inflation rate last year reached to a record 231 million percent when the country was still using the worthless Zimbabwe dollar.
But in March the inclusive government of Robert Mugabe and Prime Minister Morgan Tsvangirai scrapped off the local currency introducing the use of hard currencies such as the United States dollars and South African rand.