via Zim economic reserves critically low | SW Radio Africa by Alex Bell on Thursday, March 6, 2014
Zimbabwe’s Finance Minister has revealed that the country’s economic reserves are made up solely of gold coins, worth an estimated half a million dollars.
In a another sign of the desperate state of the country’s economy, Patrick Chinamasa said Wednesday that Zimbabwe’s reserves would only be enough to buy 1,400 tonnes of maize.
“The (central) bank does not hold any gold reserves except for gold coins, which were valued at $501,390 as at the end of January 2014,” Chinamasa said.
Resource rich Zimbabwe last year reportedly produced 13 tonnes of gold, but corruption and a lack of transparency continue to bleed the fiscus of any meaningful gain.
According to Transparency International Zimbabwe, an estimated $50 million worth of gold is smuggled out of Zimbabwe every month and the country is losing more through secret financial deals, tax evasion and other illegal activities.
The watchdog group’s Sibonokuhle Ndhlovu-Ncube, further revealed last week that an estimated $1.7m worth of gold is being smuggled out of Penhalonga alone every year. Speaking at a workshop on debt in Bulawayo Ncube said according to the Global Financial Integrity Report, Zimbabwe has lost $12 billion in the last three decades.
Economic analyst Masimba Kuchera told SW Radio Africa that the revelation of the dire state of the country’s reserves was a “clear depiction of where we are as a country, financially at the moment.” He said years of mismanagement at the Reserve Bank had put Zimbabwe in this position.
“We probably had gold reserves that we liquidated as a country between 2002 and 2008 when the Reserve Bank took qausi-fiscal matters into its own hands. It means the Reserve Bank did not look to the future when it decided to liquidate everything at once,” Kuchera said.
Kuchera explained that the lack of gold reserves puts the country in a desperate and dependent position, unable to pay off critical debts or reintroduce its own currency.
“This is an indication that we may not be able to bring back our currency soon, because we don’t have the reserves (to pay debts). If you are owing, you would need something like gold which you can sell and pay your debts. The reserves are also used to support a national currency. You need actual gold in reserve to be able to sell later,” Kuchera said.
Zimbabwe’s massive international debt has seen it being refused more credit by the traditional lenders, the World Bank and International Monetary Fund. However, the country is still receiving huge financial loans from Western nations, including a recent $10 million education loan from the UK. Kuchera said these loans, while “useful” do not help shore up the country’s reserves.
“Not having gold reserves means you don’t have a savings account and you are basically living hand to mouth. It means you don’t have any savings to fall back on,” Kuchera said.
Meanwhile the dire state of the economy has not stopped the ZANU PF government from splashing out millions on luxury cars for government Ministers. The party also hosted a $1 million dollar birthday party for Mugabe, who two weeks later celebrated his daughter’s $5 million wedding.