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It is doubtful whether the action in Zimbabwe will have any effect. Who can afford an $1800 gold coin?
Why is? Zimbabwe wants to issue a gold coin to combat the hyperinflation that has been rampant for years. Thanks to the coins made from gold mined in the country, prices should become more stable, according to the government of the South African country. A coin is said to cost around $1800. The government hopes that as many gold coins as possible will be paid for in dollars and that it will get foreign exchange this way. The coin may not be resold for six months after purchase.
If people can no longer buy bread, the government could also be destabilized.
Who can afford this? Only a few people can afford $1,800 for a gold coin in Zimbabwe, where the gross domestic product per capita is just over $1,200 and 40 percent of the people live below the poverty line. “For example, people who are involved in gold trading or other trades,” says Naveena Kottoor, a freelance journalist in Kenya. The hyperinflation in Zimbabwe has meant that nobody wants the local currency anymore – because it loses a lot of value very quickly. In some places, prices in local currency are much higher than in dollars. The traders want to ensure that as many of their goods as possible are paid for in dollars and that they get foreign currency.
How is hyperinflation manifested? The prices in Zimbabwe are rising steadily and sharply, especially recently the prices of imported goods have risen again. Middle-class people like teachers and nurses can only afford half of what they could afford a short time ago. That’s why there have been protests in Zimbabwe lately. It was demanded that half of the salaries should be paid in dollars.
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In June there were protests in Zimbabwe, for example by hospital workers. They demanded higher wages and better working conditions.
Keystone/Aaron Ufumeli
Why is the government acting now? “If people can no longer buy bread, the system and the government could also be destabilized,” says journalist Naveena Kottoor. Therefore, the economy should be stabilized. However, it is unclear whether the gold coin can help. The International Monetary Fund IMF described the measure with the gold coin as “unusual”.
At the same time, he emphasized that the hyperinflation in Zimbabwe cannot be brought under control with a single measure. Rather, a comprehensive package of measures is needed, in which corruption and the issue of public funds must also be addressed. “This is the only way to restore confidence in the Zimbabwean economy,” says Kottoor.