Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said $50 million worth of bond notes will go into circulation by year-end. This will happen despite the people protesting that that don’t want bond note as the main currency in the country
He said the government was going ahead with the introduction of the currency — surrogate to the United States dollar.
The reserve bank governor said the issuance of bond notes has a self-control mechanism to ensure that they are in line with the country’s export receipts.
“The bond notes would be gradually released into the economy in sympathy with export receipts through normal banking channels up to a maximum ceiling of the facility of $200 million,” he said in an interview with the Daily News on Thursday, adding that the ceiling would be attained when total exports reach around $6 billion.
“At the rate at which the country is exporting, we anticipate the bond notes equivalent to around $50 million would be in the market by the end of December 2016,” Mangudya said.
The RBZ devised the plan to introduce the bond notes as part of strategies to curb a crippling shortage of US dollars.
Since January 2009, Zimbabwe has been used foreign currencies — mainly the US dollar and
South African rand — after dumping its own currency that had been ravaged by hyperinflation.
The central bank chief said sustainability of the multi-currency system in Zimbabwe was 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 such as exports of goods and services and Diaspora remittances are therefore critical to enhancing foreign exchange reserves of the country,” he said.
Economic experts said the current harsh economic environment coupled with the country’s trade deficit of around $2, 5 billion per annum required a substantial policy shift to promote exports.
Zimbabwean products currently lack a competitive edge due to global shocks that include the strong US dollar, sharp decline in commodity prices and tighter global financial conditions.
It is against this background that the country’s cash-strapped government introduced the performance related export bonus schemes of up to five percent to be awarded to exporters of goods and services to address the challenges of low productivity and promote exports with the overall aim of liquefying the multi-currency system.
Mangudya reiterated that the introduction of bond notes does not mark the return of the Zimbabwe dollar.
“The macroeconomic fundamentals or conditions for the return of the local currency are not yet right to do so,” he insisted.