Breaking News

Zimbabwe to phase out 'untenable' bond notes?

by Staff Reporter
14 January 2018 | 21339 Views
There is consensus in Government that bond notes have largely served their purpose and are "not tenable" within the context of Zimbabwe's new economic growth trajectory.

Finance and Economic Planning Minister Patrick Chinamasa has projected 4,5 percent economic growth in 2018, from 3,7 percent last year, driven by favourable policy interventions.

The thinking in Government is that in the long-term, bond notes may impede sustainable economic growth as envisaged by President Emmerson Mnangagwa's administration.

The Reserve Bank of Zimbabwe introduced the notes on November 28, 2016 as an export incentive meant to boost foreign currency generation.

Now Government is steering towards monetary normalcy by first putting in place the macro-economic prerequisites to pave way for eventual reintroduction of a local currency.

Deputy Finance Minister Terrence Mukupe told The Sunday Mail last week that there was need to take steps towards introducing a local currency once "fundamentals are in place".

"The official position is that we have bond notes in place, but that situation is not tenable. But we cannot have our own currency at the moment because fundamentals are not in place.

"We need to have sufficient resources and increase exports for us to introduce our own currency. As long as we have Zidera (the Zimbabwe Democracy and Economic Recovery Act), we can't do that," said Deputy Minister Mukupe.

The US passed Zidera in 2001 to cripple Zimbabwe's economy by blocking extension of funds by multilateral financial institutions, primarily the World Bank and International Monetary Fund.

Deputy Minister Mukupe said Zimbabwe adopted multiple currencies – headlined by the US dollar in 2009 – to stabilise the economy and growth was the next stage.

The greenbacks in local circulation have become a target for cash hoarders and regional businesses that come to mop up US dollars in Zimbabwe and take them back to their own countries.

In this regard, Deputy Minister Mukupe said: "There is recognition that to achieve the growth we want, we need to have our own currency. Bond notes are in place and they are still serving their purpose.




"But we can't be printing bond notes that are not backed by a facility. We need a facility such as the one we have with Afreximbank."

Egypt-based Afreximbank has a US$200 million facility backing bond notes in circulation; while bond coins are backed by a US$50 million facility, again from Afreximbank.

In 2017, RBZ Governor Dr John Mangudya announced that Afreximbank would extend another US$300 million facility to back bond notes of the same value.

Dr Mangudya could not be reached last week to comment on the status of the facility and continued circulation of bond notes.

In an interview with our sister paper Business Weekly last week, Foreign Affairs and International Trade Minister Lieutenant-General (Retired) Sibusiso Moyo said: "Generally, our products are expensive and, therefore, not competitive on the export markets.

"We need to retool to increase efficiency and reduce labour costs which are affected by the use of the US dollar. The cost of production has to come down and one of the ways this can be achieved is through attracting cheap finance. If industry is able to attract capital at low interest rates, then the cost of production will immediately decrease.

"Naturally, there is an absence of own currency, which would have retained both value both domestically and comparatively with our trading partners and this is a factor."

On December 16, 2017, Deputy Minister Mukupe was quoted saying, "We are in agreement as Government that the situation that we have with bond notes is not a sustainable situation and it's not the end.

"And we are also in agreement that as a nation, for us to have sustainable growth, we must have our own currency.

''But if this (local) currency is going to be introduced, there are certain conditions and certain fundamentals that have to be in place. We can't just wake up and introduce a currency today; it won't work."

Last week Deputy Minister Mukupe acknowledged that the idea of a sudden reintroduction of a local currency elicited unhappy memories of the hyperinflation of 2007/8. As such, a local currency return would have to be measured and backed by sound economic fundamentals.


Bond Notes Terrence Mukupe Economic Recovery Patrick Chinamasa

Source: The Sunday Mail

Comments

Latest News

Queen Elizabeth consoles Zimbabweans

by Staff reporter | 22 March 2019 | 0 Views

Bulawayo challenged to engage govt on nagging issues

by Staff reporter | 22 March 2019 | 1 Views

Mnangagwa and Matabeleland leaders finally find each other

by Matabeleland Collective | 22 March 2019 | 1 Views

Mnangagwa to support Gukurahundi victims

by Mandla Ndlovu | 22 March 2019 | 2 Views

Chamisa, Mnangagwa cancel Bulawayo, Shurugwi rallies - THE MDC has can...

by Staff reporter | 22 March 2019 | 1 Views

Operation Florian to train BCC fire fighters - United Kingdom-based ch...

by Staff reporter | 22 March 2019 | 1 Views

Airlifted leather sofas trigger PR disaster as Mnangagwa meets Idai vi...

by Staff reporter | 22 March 2019 | 1 Views

Hwende disowns Twitter account

by Staff reporter | 22 March 2019 | 1 Views

Teachers reject $129 salary deal

by Staff reporter | 22 March 2019 | 1 Views

Zanu-PF MP under fire for 'lying', deserting cyclone victims - CHIMANI...

by Staff reporter | 22 March 2019 | 1 Views

Victoria Falls tour operators dispatch helicopters, rafters to Chimani...

by Staff reporter | 22 March 2019 | 1 Views

Obert Mpofu's ex-employee freed on $500 bail

by Staff reporter | 22 March 2019 | 2 Views

Gweru in major roads rehabilitation exercise - GWERU City Council has ...

by Staff reporter | 22 March 2019 | 1 Views

Bulawayo's fire brigade defies odds

by Ben Sheppard I AFP | 22 March 2019 | 1 Views

Fuel shortages worsen

by Staff reporter | 22 March 2019 | 1 Views

New telecoms tariffs loom - CONSUMERS of telecommunications services m...

by Staff reporter | 22 March 2019 | 1 Views

Auxillia Mnangagwa throws out chief, MP from event

by ZimLive | 22 March 2019 | 1 Views

Chamisa's MDC on fire - THE intense jostling for positions within the ...

by Staff reporter | 22 March 2019 | 1 Views

Zenzele Ndebele freed after arrest at Mnangagwa event

by ZimLive | 22 March 2019 | 1 Views

Govt use of violence on its own people is tragic - Continued from last...

by Ambassador Thomas-Greenfield | 22 March 2019 | 1 Views

Cyclone did not affect fuel pipeline, says Gumbo - Energy and Power De...

by Staff reporter | 22 March 2019 | 2 Views

Wicknell Chivayo acquitted

by Staff reporter | 22 March 2019 | 1 Views

Zimbabwe blocks US$1bn pipeline project - THE Ministry of Energy has b...

by Staff reporter | 22 March 2019 | 1 Views

cCourt to decide on Mphoko pension

by Staff reporter | 22 March 2019 | 1 Views

Mnangagwa must be open on deals

by Staff reporter | 22 March 2019 | 1 Views

Mliswa takes Minister Ziyambi Ziyambi head on again

by Mandla Ndlovu | 22 March 2019 | 1 Views

BREAKING: Journalist Zenzele Ndebele freed

by Mandla Ndlovu | 22 March 2019 | 1 Views

Mnangagwa snubs Warriors

by Mandla Ndlovu | 22 March 2019 | 1 Views

Entertainment

Andy Muridzo promises new album

by Simbarashe Sithole | 18 March 2019 | 268 Views

Kwejani band is back! - AFTER an eight-year hiatus, Victoria Falls' su...

by Staff reporter | 13 March 2019 | 1188 Views

Moyo revives Pantsula genre

by Staff reporter | 10 March 2019 | 428 Views

Majaivana's sad farewell

by Bruce Ndlovu | 10 March 2019 | 6650 Views

Nceku shifts base to SA

by Staff reporter | 09 March 2019 | 824 Views

Baba Harare abandoned by band members - Jit musician, Baba Harare has ...

by Staff reporter | 04 March 2019 | 2049 Views

Winky D pays the price

by Staff reporter | 03 March 2019 | 5411 Views
iBlog

Ios 9 Features Inspired By Android

apple announced ios 9 on monday, and while watching the keynote, i had just a little bit of déjà vu. most of ios 9's new features seem to be squarely aimed at apple's biggest rival in mobile: android. specifically, they were about catching up to ... Read More
Sergey 13 June 2015 ago

Samsung Gear Vr Innovator Edition For S6: The Perfect Vr Intro For Professionals

we're drenched in talk about the impending wave of consumer-facing vr headsets about to hit the market, starting at the end of 2015. by contrast, you can walk into a best buy right now and pick up the samsung gear vr innovator edition for the galax... Read More
Sergey 20 June 2015 ago