According to the International Monetary Fund, inflation in Zimbabwe reached 837% (year on year) in July 2020 and, although tighter fiscal policy helped reduce it to 60.7% by the end of last year, it remains in the high double-digits.

Zimbabwe has launched new gold coins to be sold to the public in a bid to tackle chronic hyperinflation.

The gold coins – called Mosi-oa-Tunya – will have “liquid asset status”, meaning they can be converted to cash, traded locally and internationally, and used for transactions, the Reserve Bank of Zimbabwe said.

People can only trade the coins for cash after holding them for at least 180 days.

Zimbabwean economist Prosper Chitambara said: “The government is trying to moderate the very high demand for the US dollar because this high demand is not being matched by supply.”

According to the International Monetary Fund, inflation in Zimbabwe reached 837% (year on year) in July 2020 and, although tighter fiscal policy helped reduce it to 60.7% by the end of last year, it remains in the high double-digits.

This wipes away the value of people’s savings – many people saw their savings wiped out by the 5 billion per cent inflation seen in 2008, according to the IMF.

This insecurity affects trust in the local currency, the Zimbabwe dollar – many retailers don’t accept it and many Zimbabweans prefer to use US dollars for savings or daily transactions.

‘Chronic hyperinflation’

Mr Chitambara said: “For Zimbabwe we are in chronic hyperinflation so the expectation is that there will be a huge uptake of these gold coins.”

The coins, which have a purity of 22 carats, will be priced based on the international market rate for an ounce of gold, plus 5% to cover production and distribution.

But that price could put them out of reach for many people in a country so poor that a third of the population is at risk of food insecurity.

**By SkyNews

**Source