Business Correspondent
The recent devaluation of the Zimbabwe Gold currency (ZiG) by over 40% against the US dollar has sparked urgent calls from the Amalgamated Rural Teachers Union of Zimbabwe (ARTUZ) for a salary review for civil servants.
On September 27, the Reserve Bank of Zimbabwe (RBZ) adjusted the ZiG exchange rate from 14.1 ZiG per dollar to 24.3 ZiG per dollar, significantly impacting the purchasing power of local consumers.
Impact on Civil Servants
ARTUZ emphasizes that the ZiG component of public sector salaries should be automatically adjusted to reflect the devaluation.
“Mthuli Ncube and the employing authorities in government should not wait to be told that since ZIG has officially been devalued by 44% to the USD, the ZIG component of salaries should be automatically adjusted,” they stated.
Criticism of Government Actions
Businessman Kuda Musasiwa condemned the government’s actions, saying it’s “not only immoral but criminal” to pay civil servants at the ZiG13.5 exchange rate only to devalue the ZiG to 25. Mayor of Bulawayo, David Coltart, also criticized the timing of the devaluation, calling it “cynically calculated.” He noted that civil servants’ bank accounts have lost almost half their value overnight, highlighting the catastrophic policy failure.
Consequences of Devaluation
The devaluation of the ZiG will likely lead to diminished purchasing power for local consumers, potentially causing a decline in living standards. This is not an isolated incident, as Zimbabwe has experienced significant currency fluctuations in the past, including a 100 to 150 percent increase in parallel, official auction system, and interbank exchange rates in May 2023.
Global Perspective on Currency Devaluation
Currency devaluation can have far-reaching effects on global trade. In countries like China and Argentina, devaluation has boosted exports but also led to inflation, trade imbalances, and concerns about currency wars.
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