Government is working on a plan to establish a gold reserve set to anchor the introduction of a local currency when the right time comes for the return to the Zimdollar, it has been learnt.

This comes at a time when the country is grappling with cash shortages and economists believe the issuance of a gold backed local currency would help stimulate economic activity.

Modelled around the $200 million Afreximbank facility, which is backing the current bond notes in circulation, economists believe the local currency will ease liquidity challenges and stimulate aggregate demand.

Plans to create a gold reserve involve investing in the efficient operations of Government’s gold mining firms, including Sabi, Elvington and Jena gold mines.

Sabi Gold Mine resumed operations recently with targets to produce about 25kg of gold per month after a five-year hiatus caused by working capital constraints.

Mines and Mining Development Minister Walter Chidhakwa said the gold reserve would complement the Sovereign Wealth Fund, where a set of minerals would be reserved for future generations.

The legal processes that will give effect to the fund are still before Parliament.