The Sunday News
Zimbabweans should not panic over the impending introduction of bond notes as their United States dollar bank accounts will remain operational, Reserve Bank of Zimbabwe Governor Dr John Mangudya has said.
And the central bank is importing US$15 million weekly and aggressively marketing productivity to help end US dollar cash shortages in Zimbabwe. The RBZ will introduce bond notes at the end of October to improve liquidity on the back of cash shortages that began in April 2016.
While monetary authorities have clearly outlined how the coming dispensation will work, there has been apprehension among depositors over their US dollar bank balances. Market reports indicate some people have been trying to empty their accounts in case “bond notes substitute the US dollars in circulation”.
Engaged by our Harare Bureau over the matter, Dr Mangudya assured the nation that the multi-currency system remained firmly in place. He said depositors would withdraw US dollars and other currencies in the multi-currency basket, and only encounter bond notes as small change in transactions.
Further, Dr Mangudya explained, a self-control mechanism would ensure no bond notes were issued when there are no exports.
“There is no reason why people should panic over bond notes given that the multi-currency exchange system is here to stay and that its sustainability is dependent on the economy’s capacity and ability to generate foreign exchange to meet its domestic and foreign requirements, development and promotion of foreign exchange revenue streams.
“These revenue streams such as exports of goods and services and diaspora remittances are, therefore, critical to enhance the foreign exchange reserves of the country. However, if we don’t move to incentivise our exporters, we will continue to consume our reserves, which is not healthy for our economy. The Bank has heard and taken note of the public’s concerns, fears, anxieties and skepticism of bond notes, which all boil down to the general lack of trust and confidence within the economy.”
Dr Mangudya went on: “We are addressing the concerns by introducing small denominations of bond notes of US$2 and US$5. In addition, the central bank has proposed setting up an independent board to have an oversight role on the issuance of bond notes in the economy.
“Doing nothing to incentivise exporters of goods and services whilst at the same time desiring to maintain the multi-currency exchange system is not only contradictory but also imprudent. It is critical to emphasise that introduction of bond notes does not mark the return of the Zimbabwe dollar through the back door.”
The RBZ chief said exporters would get incentive proceeds in US dollars credited to their bank accounts. Exporters would then transact through the Real Time Gross Settlement system, pay for imports and transact freely in the multi-currency system.
Dr Mangudya said Zimbabwe’s trade deficit – roughly US$2,5 billion yearly – required a substantive policy shift.
“The bond notes will be gradually released into the economy in sychrony with export receipts through normal banking channels up to a maximum ceiling of the facility of US$200 million.”
Zimbabwe National Chamber of Commerce chief executive Mr Christopher Mugaga said the RBZ should educate the public extensively on how bond notes would work.
“We have already embraced the bond notes; what’s left now is for the governor, Dr Mangudya, to explain how the bond notes are going to be introduced on to the market and how they will be applied,” he said. “The governor also mentioned that an independent committee on bond notes will be set up. We want to know who will constitute the committee … as business, we aren’t worried about the introduction of bond notes, therefore, we don’t foresee any danger.”
Confederation of Zimbabwe Industries vice-president Mr Sefelani Jabangwe weighed in: “The public should not panic as they have not seen how they will operate. According to Government, they will constitute only three percent of the currency in the circulation and will not replace the multi-currency system. Therefore, there is no need for the public to panic.”