HomeAMH VoicesAMHVoices: You cannot monetise failure through bond notes

AMHVoices: You cannot monetise failure through bond notes


THE Zimbabwean citizen craves a policy blunder-free week. The previous weeks and days have not been different, a quick reminder that policy blundering is part of President Robert Mugabe and Zanu PF’s DNA.

Jacob Mafume,PDP Spokesperson

First is the issue of bond notes. Reserve Bank of Zimbabwe (RBZ) governor, John Mungudya announced in his mid-term monetary policy presentation that a further $300 million worth of bond notes would be injected into the economy.

As a matter of fact, the ones injected into circulation under the initial $200 million facility did not solve or ease liquidity crunch.

Counting the costs and questioning the benefits 14 months later, the PDP notes that the scheme has caused no good, but damage.

The bond notes have displaced the few United States dollars that had remained in circulation. Zanu PF had been warned that Gresham’s Law of bad money displacing good money would apply, but as usual they ignored.

Companies are now failing to import. Instead they now have to refer their clients to companies across the borders.

The introduction of bond notes also sent wrong signals into the economy, resulting in price hikes including on basics like cereals and cooking oil. Some shops display different prices for the US dollar against the bond note, a sign that the claim by both the governor and the President that they have powers to determine exchange rates through a statutory instrument is in itself a fallacy.

Extending the bond note agenda means an unrepentant violation of the country’s Constitution, which states that the State can only borrow through Parliament. The debt relating to the bond notes will now stand at half a billion, money borrowed without Parliament’s approval. The debt crisis in the country is visibly beyond the capacity of the Finance ministry, digging a bigger hole is irrational.

The term sheets for the bond are also not available for anyone to see, as we highlighted in our previous statements our reservations on the existence of the bond in the first place.

Fundamentally the illusion that you can monetise your failures and flaws through a fake scheme is just, but a waste of time, creating a lie and then believing the lie is a sustainable economic plan.

The government must face it and pay back the money stolen from RTGS balances at the RBZ.

What is needed is an active policy scenario focusing on supply side solutions, as at the end of the day a currency is a reflection of a country’s exports against its imports.

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