Bond notes not equal to US dollar: Ncube

FINANCE minister Mthuli Ncube has admitted that the country’s surrogate bond note is not equal to the United States dollar, contradicting earlier government pronouncements on the currency.

BY RICHARD CHIDZA

The Treasury chief also revealed that as part of political reforms meant to rebrand Zimbabwe, the Zanu PF government would repeal controversial legislation such as the Public Order and Security Act (Posa) and the Access to Information and Protection of Privacy Act (Aippa), long blamed for constricting the democratic space.

Ncube was addressing British think-tank Chatham House in London yesterday, where he admitted that market forces were dictating government policy.

“The market is setting the pace. What is left for us is choreography and management of the economic fundamentals. The economy has dollarised. RTGS [real time gross settlement] balances are over

$6 billion. The market is doing everything, we are going through a transition. The market has said these currencies [US dollar and bond notes] are not at par. I don’t want to argue with the market. The bond notes will, at some point, have to be demonetised and I cannot tell you (when that will be),” Ncube said.

In announcing the monetary policy last week, Reserve Bank of Zimbabwe governor John Mangudya reintroduced foreign currency accounts (FCAs), separating them from electronic balances, but insisted the bond note remained at par with the greenback.

The introduction of a new tax regime triggered a fresh economic crisis, with the exchange rate hitting the roof and basic commodities disappearing from shelves.

Ncube said government would not raid the new FCAs.

“Not under my watch, we will not raid FCAs. I promise we will not raid them,” Ncube said, adding: “I will investigate any raid on an FCA after the announcement of the new policy”.

“We want to clear our arrears with the World Bank, the Paris Club as well as other creditors. We are committed to meeting our targets as set by the International Monetary Fund and other creditors.”

Former President Robert Mugabe was accused of using extra-legal powers conferred by archaic laws such as Aippa and Posa to close the democratic space as well as deal with opponents of his regime.

But Mnangagwa seems to have gone all out to try and charm the world, with Ncube announcing from London that the two laws would be repealed.

“We will get rid of Posa and Aippa. That is a big change. The President (Mnangagwa) is committed to the rule of law. We are determined to protect property rights and will pay farmers who lost their farms under the land reform programme as provided for by the Constitution.”

The Finance minister defended Mnangagwa’s slim election victory and talked of legitimacy around his administration.

“There was a challenge of the presidential results. The issue was subjected to a judicial process that confirmed President Mnangagwa as winner. I don’t see a legitimacy issue there,” Ncube said, arguing Zanu PF’s two-thirds majority in Parliament also cemented Mnangagwa’s victory.

MDC Alliance leader Nelson Chamisa challenged Mnangagwa’s slim 50,8% win in the July 30 polls, where he garnered 44,3% of the vote in initial results declared by the Zimbabwe Electoral Commission before slashing the Zanu PF leader’s margin to 50,67% following the opposition party’s petition.

39 Comments

  1. so what is bond equal to ncube and what happens to our 3 major supermarkets which are trading full time at stipulated prices in bond can we conclude that there are trading in nothing, very unfair

  2. “RTGS [real time gross settlement] balances are over $6 billion.” In other words, they’ve replaced people’s hard earned US$ with worthless figures. What a heist!!

    1. tendai chaminuka

      @Citizen.yes a heist chaiyo

  3. Let us give him space.He seems to be doing the right thing.Probably what he has to do is to explain any policy changes before implementation.The market always reacts to speculation either positively or negatively.

  4. This is disaster gentlemen. All along we were being fooled that the bond not is equal to usd. If the government go about lying to her people what does this mean? We are under a lying government aiming at stripping off the citizens of their property rights. At least Muthuli Ncube said the truth, its only that he is now talking about POSA and AIPA which is not under his ministry and this shows the confusing which is hounding our current government.

  5. The bond is not equal to the US$? I could have told him that long ago and I do not have a finance or economic qualification. You cannot put the jackal in charge of the chicken run, as these guys are looking for another way to siphon hard currency.

  6. There is no coherence in this government over this bond notes issue, at home Mthuli’s RBZ Governor is telling us that the bond note is equal to the USDollar. I dont think Mthuli has the official position and would not be surprised if he changes his stance when he comes back home which in it self will be a third u-turn that he will have made in less than 30days at the job. We are headed for disaster.

  7. John Smith Banda

    Mthuli Ncube lacks wisdom. Some things are better left unsaid. Ncube does not seem to realize that his utterances are wreaking havoc in the market. Ncube is always straying into monetary arena of the Reserve Bank governor. A minister’s remit is fiscal policy, that is the income and expenditure side of governance.
    Mthuli must always watch his mouth. It has cost the general public tremendously.

  8. zimbabwe is in trouble,real big trouble

  9. IF Mangudya resigned due to failure of bond notes then I will believe you that you wont invade our so called proposed nostro FCAs. Tokuzivai vatema you are good at talking and you cannot be trusted by any sane person.

  10. Comment…Vose vaiti BOND NOTE IS EQUAL TO US$ handipfungi kuti pfungwa dzavo dzinofunga seyi. Nekuti zvirikunzi nyika ahina FOREIGN CURRENCY, asi BOND NOTE IS EQUAL TO US$. Ini zvangu ndakangoita economics pa’O’ Level chete pamwewo ndochinzero ndisingazvinzwisise. BOND NOTE EQUAL TO US$, ASI NYIKA AHINA FOREIGN CURRENCY.

  11. Vose vaiti BOND NOTE IS EQUAL TO US$ handipfungi kuti pfungwa dzavo dzinofunga seyi. Nekuti zvirikunzi nyika ahina FOREIGN CURRENCY, asi BOND NOTE IS EQUAL TO US$. Ini zvangu ndakangoita economics pa’O’ Level chete pamwewo ndochinzero ndisingazvinzwisise. BOND NOTE EQUAL TO US$, ASI NYIKA AHINA FOREIGN CURRENCY.

  12. tendai chaminuka

    Nhai Ncube POSA ne AIPPA what has that got to do with fixing the current economic mess.Concentrate on economy izvo zvana POSA naAIPPA siyira vamwe

  13. If you have been burning money and you hold a huge bond balance in your bank you have every reason to worry. But on the other hand what value did you create besides making yourself rich from the poor. Burning money is never a moral source of enrichment. The same people are crying foul on the 2% transaction tax because they want to be allowed to continue burning money for free while destroying the economy. If you earn $500 would you loose sleep with $10 tax. But if you are burning $1m a day they you want us to come to your defence.

  14. You are right Ncube, only that people are impatient. We are following closely and we are seeing a clearer future. The fact that you have spoken about Posa and Aippa simply means its an issue which is being discussed in gvt. Just make the moves more transparent and clearer for all to understand.

  15. Okungabantu lokhu kubhanxekile. Akuzwisisi ukuthi umbuso uphathwa njani. Nanku kusiphehlela udubo. Umbuso kufanele ususwe empumalanga uphenduke ebantwini abazwisisayo udaba lokukhokhela.

  16. all policies FCAs, FDI etc maybe implemented but what remains bond notes should just be removed from circulation not because we hate them but honestly asking ourselves what purpose is it serving one sees there aren’t helping anyhow they are actually making things worse before they came into existence things were better off.their introduction was actually a path that can’t be justified trying to defile all economics laws odds gresham’s law in particular, ndopavaifana kungoona kuti zimwe ndezimwe kuenzanisa donkey nemombe chero iyo fdi yacho munyika musina currency shuwa lets not b optimistics tichizvinyepera lets attack the real problem

    1. It’s not the removal of the bond that is a solution but pumping value in it by producing, a factor which an old school guerilla warfare movement like ZanuPF will never understand even if you give it a thousand years to rule. Money is a storer of value and just like a tank you don’t throw it away claiming it’s useless just because you the owner is lazy to fill it up with water or oil whatever the case may be. A brand new tyre does not become useless if you haven’t filled it up yet. We just have to fill our bond note or currency with value by producing not blaming it.

  17. PaIssue ye POSA ne AIPPA Ncube was trying to mk a point that Zimbabwe is serious abt all reforms and to give confidence to potential investors that we a going to abide to the rule of law.

    1. This silly notion that investors are species only foreign is the greatest African undoing which has seen us being led by clueless presidents into perpetual colonialism and debt.In every successful nation, the collective mindset is: We are our own liberators – politically, scientifically, socially, economically and otherwise

    2. tendai chaminuka

      How does POSA and AIPPA directly affect his audience uku kwanga kwave kuwawata.Kutengesa mangayi panhamo

  18. I think what the professor said is conceptually correct; it’s unfortunate that we are so quick to criticise without a proper analysis of one’s comment(s). Ncube said “the MARKET has said these currencies [ US Dollar and bond notes] are not at par. I don’t want to argue with the market.” It’s clear, therefore that this is NOT a policy shift but a mere admittance that the market decides to either equate the two or not. Now, about POSA and AIIPA, the minister was simply responding to questions posed to him by the media and he was spot on by addressing those concerns.

    1. zanu hahusati maiziva. vanoshanduka shanduka. havamiri muzvokwadi. ma account atinawo aya takamavuriswa vachiti ma fca.munozviziva here. bond rakauya zvichinzi its for change. Mthuli anoziva basa but company yaapinda ye zanu iyi ummm

  19. Shame people of Zimbabwe do not unite and become strong again, Note: we Do Not Need the WhiteMan to Succeed.

    I’ve been here in Zim for one year now and same problems as last year…. No Mvura No Gas, Queues in the stores and people suffering in the rural areas…. This is happening again just before the planting season which for many is the most important part of the year… waiting for the rains to come.
    Don’t worry about the Bond(008 fake James Bond !!) or the government both of which we can do little about.
    Zimbabwe needs to organise themselves better in the rural areas and start farming more efficiently to feed themselves with a RANAGE of GOOD HEATHY food apart from MAZE. The excess grown will then be sold or shared !!

    Advice to all in the rural areas Put Your Money Together and Sink a Bore Hole until you Hit the Water Table. Install Pumps and Taps Start farming 2-3 harvests a Year… Free yourselves from the Bond and create your own Wealth.

    Ras Tafari

    1. Chitungwiza Old Boys

      Drought has been predicted unfortunately

  20. Honestly, how could you read from the same page with the Prof. when you are a mere form 4 Economics graduate and a pathological thief bent on corrupt tendencies always?. Carry on Prof. we are right behind you. Matsotsi anongovukura. Haadi kuti zvinhu zvigadzirike.Iko mukahwa mhere zhinji mu labour ward modoziva kuti mimba iya yozvagwa……modogadzirira makorokoto makurusa. When change cometh, people resist it, when it is delayed, people yen for it. Such is the social inertia, to resist change when it is bestowed upon them, and to refuse not to change when when that change is not anywhere near.

  21. From the onset “Bond” was a mere tinted piece of paper designed to register / acknowledge a transaction effected.

  22. zvakuda chamisa izvi

  23. The government should just demonitise these bonds and give back citizens their money and then begin afresh from there. Remember, we had said from the word go, that we did not want those bond notes.
    As long as there is no proper demonitisation very few people will keep their forex in banks. Zimbabweans have been abused for too long!!!!

  24. Again the headline is misleading..the Minister said “The market” ..and its not him saying that.In these times we should have the media reporting responsibly and not twisting statements made by the Minister for whatever reasons.

  25. Aka ka minister of finance kakatodhakwa zvako aka. Hapana zvakanoziva.

  26. By saying ‘The market has said these currencies [US dollar and bond notes] are not at par. I don’t want to argue with the market’, Ncube has basically shown two fingers to Mangudya and his RBZ’s stupid policy of introducing bond note and lying to people that it was at par with the US$. He could have been more blunt but this was a good way to say without being antagonist. We wait to see what happens by end of the year where we can reasonably judge the few steps he has taken to rid the economy of the disastrous policies introduced before his time.

  27. KO ISU TAISAVER MARI ARI MAUSA TONYURA HERE NHAI MSULI NCUBE

    1. I would be amazed if any right thinking person deposited their US$ in their bank account. Did you?

  28. if the bond was equivalent to the usd then we would definitely expect it to be traded in the forex market being collated by other currencies with stronger value, unfortunately that’s is far from being true at this present time, nevertheless the market is driven buy human behavior in other words sentimentals, in this case the people have the ability to drive it on a positive or negative based on their reaction towards the current market changes anticipated by the public.its just a matter of patience in order for decisions to be made promptly for better stability.

  29. The bond note and the USD are at par. The problem here is that government is failing to police its economic space. The bond note is a political-economy tool which the government should protect by statutory instruments, not market forces, because it is a surrogate currency. It is backed by the government’s commitment to value it on the USD. Everyone should remember that the laws of economics are hardly as rigid as the laws of physics; they are inductive meaning they are applied to satisfy a purpose given particular conditions. The initial purpose of the bond note should not be lessened to feed the whims of profiteerers who seek to construct a selfish niche for themselves. The Chinese should always be our example in this currency issue because this, like theirs, is a mixed economy. Creative strategies for suppressing the use of induced scarcity by market players for profiteering or sabotage should be the highest priority at this moment, not encouraging it. Mthuli is way out of line. An Economic Terrorism Act(2018) is in order here!!!!!!!!

  30. The bond note and the USD are at par. The problem here is that government is failing to police its economic space. The bond note is a political-economy tool which the government should protect by statutory instruments, not market forces, because it is a surrogate currency. It is backed by the government’s commitment to value it on the USD. Everyone should remember that the laws of economics are hardly as rigid as the laws of physics; they are inductive meaning they are applied to satisfy a purpose given particular conditions. The initial purpose of the bond note should not be lessened to feed the whims of profiteerers who seek to construct a selfish niche for themselves. The Chinese should always be our example in this currency issue because this, like theirs, is a mixed economy. Creative strategies for suppressing the use of induced scarcity by market players for profiteering or sabotage should be the highest priority at this moment, not encouraging it. Mthuli is way out of line. An Economic Terrorism Act(2018) is in order here!!!!!!!! Don’t forget the bond note is being traded internationally by the saboteurs.

  31. What happened to the Afriximbank’s Guarantee on the Bond notes issue?

  32. Isu tumari twedu tiri mumaecocash tushoma twataisaver kut titengewo 2 or 3 things mumba twavakunz hatusiri in par with US Mwari pindirai u are father to the fatherless hatinawo vatungamiri vane tsitsi tongai murimi Jesu

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