The Reserve Bank of Zimbabwe (RBZ) says it will introduce bond notes next month in denominations of $2 and $5, as it seeks to charm locals, who have been vocal against the move viewed as an attempt to re-introduce the hated local currency.
BY VICTORIA MTOMBA
The bond notes, worth $75 million, would be in circulation by year end.
In May, RBZ governor John Mangudya said the bank would introduce bond notes worth $200 million under a facility guaranteed by the African Export Import Bank.
The facility, he said, would give a 5% export incentive meant to boost exports. He said then the notes would be in denominations of $2, $5, $10 and $20.
In his mid-term monetary policy review yesterday, Mangudya said he had heard and taken note of public’s concerns, fear, anxiety and scepticism of bond notes, which all boiled down to general lack of trust and confidence within the economy.
“The bank is addressing the concerns by planning to introduce smaller denominations of bond notes of $2 and $5. In addition, the bank has proposed the setting up of an independent board to have an oversight role on the issuance of bond notes in the economy,” he said.
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Mangudya said exporters would receive the 5% export incentives, which would be credited in their accounts in United States dollars.
He said tobacco was the largest export commodity and this year, farmers would receive $28m in bond notes, which would be the incentive from the bank for exporting.
Mangudya said the fact that he had discussed the issue of bond notes with various stakeholders in the economy does not mean that he would fail to implement the right policy as there were few people so far who do not want the bond notes.
“This economy has 14 million people and this is a Reserve Bank of Zimbabwe. Why do you think people who are negative have a say? We have to take care of the fundamentals. This is an addition to the United States dollar and no one is here to destroy the multicurrency system. There is no way 5% will crowd out the 100%,” he said.
Mangudya said the country was not yet ready to introduce its own currency as the fundamentals of necessitating such a move were not in place, which include sustainable interest rates, sustainable level of inflation, high consumer and business confidence and balanced and sustainable government budget.
He said other conditions included minimum foreign exchange reserves equivalent to one year’s import cover, which he said the country did not have at the moment.
