HARARE, The Reserve Bank of Zimbabwe (RBZ) has unveiled a new 300 million US dollar facility which will back the issuance of more bond notes into the economy to address unceasing cash shortages.

The Africa Export and Import Bank (Afreximbank) facility is among a host of other initiatives which the central bank's Governor, Dr John Mangudya, announced here Wednesday when presenting his mid-term monetary policy statement as part of broader measures to address, among other matters, investor confidence, efficient use of foreign exchange, export competitiveness, stabilizing the financial sector and promoting a savings culture.

The Zimbabwean economy appears to have hit a plateau and is battling a fiscal deficit and low investor confidence among a host of other challenges which have fueled market indiscipline.

With cash shortages now a major feature of the economy, Dr Mangudya said expansion of the 200 million USD export incentive facility through which the bond notes were introduced last year by an additional 300 million USD would help ease shortages.

Under the export incentive facility, exporters are paid an extra of between 2.5 per cent and 5.0 per cent of their foreign currency receipts via the bond notes, which officially trade at 1:1 with the United States dollar.

Dr Mangudya said the export incentive scheme had seen the country's exports jump by 14 per cent since it was introduced in the middle of last year, with earnings totaling 5.0 billion USD being achieved during the period.

"Building on the success of the 2.5 per cent to 5.0 per cent export subsidy facility which is on the table, the Bank found it imperative to extend the export incentive scheme by a further 300 million USD under a standby liquidity support facility which is being finalised by Afreximbank," Dr Mangudya said.

"As like under the 200 million USD facility, the Bank will release the bond notes into the market on a drip-feed basis after conclusion of the facility."

Bond notes and coins are legal tender in Zimbabwe and are being used alongside a basket of multi-currencies for transaction purposes in the economy. In order to overcome the desire for spending productive time in queues to receive cash, Dr Mangudya said it was imperative that the public embraces digital payment systems.

"We do not see why there continues to be an appetite for carrying cash (when most services can be paid for digitally," he said.

Given the high contribution of diaspora remittances to the country's foreign currency receipts, Dr Mangudya hiked the incentive that locals get when they receive money from abroad from 3.0 to 10 per cent. The incentive only applies to funds remitted through normal banking channels or mobile wallets, he said.

Dr Mangudya said there was about one billion USD in hard cash in the economy, blaming poor circulation for the persistent shortages. "Foreign exchange must be earned and spent wisely in order for us to survive," he said.

The central bank governor said the economy was not performing badly in terms of foreign exchange earnings but was not efficiently using the money. He said the central bank had also negotiated a 600 million USD Nostro stabilization facility that would assist in settling of the foreign payment obligations.

Besides that, the central bank said it was setting up a Zimbabwe Portfolio Investment Fund which would be used to facilitate payment of dues to foreign investors who participated on the Zimbabwe Stock Exchange. "This is to demonstrate that Zimbabwe is open for business," he said.