Home » Business » ZIMBABWE CENTRAL BANK ASSURES WILL NOT FLOOD MARKET WITH BOND NOTES

The Reserve Bank of Zimbabwe (RBZ) says it will not be negligent and flood the market with bond notes which it is set to launch before the end of this month, to ensure that the issuance of the notes will not fuel inflation.

The impending launch of the bond notes, which will be legal tender and have a double pronged aim of encouraging exports and addressing cash shortages the country is experiencing, has divided the nation.

With Zimbabwe using a basket of multi-currencies, primarily the United States dollar, as a medium of exchange, the country has for the better part of this year, faced cash shortages as a result of a combination of hoarding and externalization.

With exports being the main source through which the country earns foreign currency, the RBZ has said it will give an incentive of up to five per cent of the value of export earnings to companies which sell their goods outside Zimbabwe.

The incentive will be paid in bond notes, which are backed by a 200 million US dollar facility, and will trade at par with the greenback.

Authorities view the bond notes as a panacea to cash hoarding and externalization as they will only circulate within the country, unlike the US dollar, which is an international currency.

However, a sceptical public has already written off the bond notes before they are in circulation, arguing their introduction will lead to total disappearance from the market, of the US dollar which has been in use in the economy for the past six years since the government demonetised the Zimbabwean dollar after spiralling inflation rendered it valueless.

Black market dealers are also said to be eyeing to make a killing through selling the bond notes at a yet to be established rate against the US dollar even as authorities insist the rate will be one as to one with the greenback.

RBZ Governor Dr John Mangudya says the bond notes will be “drip-fed” into the market. “We are not just going to flood the market with bond notes. We are going to be drip-feeding to ensure that we do not cause inflation,”he told business executives on Wednesday.

About 75 million USD worth of bond notes are expected to be in circulation by the end of this year.

Cash shortages, a painful reminder of the hyper-inflationary era the country went through in the half decade ending 2008, have persisted since the beginning of the year with bank customers now sleeping in queues to make withdrawals which have been limited to as low as 30 USD per day and in some cases 50 USD per day.

Source: NAM NEWS NETWORK

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