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Regional financial experts against bond notes
07 Jul 2016 at 05:41hrs | Views
LOCAL and regional financial experts who attended the financial markets indaba in Harare last week remain sceptical over the introduction of bond notes by the Reserve Bank of Zimbabwe (RBZ), which is facing increasing pressure to drop the plan.
A snap poll by Zimbabwe Investment Authority chairman, Nigel Chanakira, who was director of ceremonies at the conference held on Thursday, showed dismal support for the proposal, which has ruined markets and triggered a run on banks.
The poll was conducted after FML Holdings Limited chief executive officer, Douglas Hoto, asked why the RBZ was forcing bond notes on the public despite clear resistance.
The RBZ says it would introduce bond notes in October to fund a five percent export incentive, as well as to improve liquidity in a market that has been hit hard by currency externalisation.
"Are bond notes creating confidence?" Hoto queried.
"Why insist on something that the market is rejecting? Why give exporters money instead of making fiscal intervention," asked the FML boss, one of the country's most respected financial experts running the country's second largest portfolio after Old Mutual.
At that point, Chanakira asked financial experts to show by raising their hands if they were in support of bond notes.
Only one person raised his hand.
Financial experts feared that instead of tackling the underlying problems that have resulted in company closures and record unemployment, bond notes would be the last nail on the coffin of the tottering economy.
Described as a "surrogate currency" by President Robert Mugabe, the bond notes have been seen as a backdoor strategy by government to bring back the domestic currency, which was ditched in 2009 after hyperinflation, estimated at 500 billion percent in 2008.
Government insists it will print an equivalent of US$200 million in bond notes as an incentive to support exporters through a US$200 million facility from the African Export and Import Bank. The incentive would be in the form of a five percent bonus for exports.
"Why not give the exporters the yen, pula or the rand? This is the message coming from the market," said Chinakira, an economist and banker.
Another financial expert asked if the RBZ had looked at other options before settling on the introduction of bond notes.
"Bond notes have not been introduced yet and the governor is aware of the concerns that are coming," said a central bank represantantive.
The financial experts spoke as the Speaker of the House of Assembly, Jacob Mudenda, hit out at government for introducing bond notes while addressing a Zimbabwe National Chamber of Commerce conference in Victoria Falls.
A snap poll by Zimbabwe Investment Authority chairman, Nigel Chanakira, who was director of ceremonies at the conference held on Thursday, showed dismal support for the proposal, which has ruined markets and triggered a run on banks.
The poll was conducted after FML Holdings Limited chief executive officer, Douglas Hoto, asked why the RBZ was forcing bond notes on the public despite clear resistance.
The RBZ says it would introduce bond notes in October to fund a five percent export incentive, as well as to improve liquidity in a market that has been hit hard by currency externalisation.
"Are bond notes creating confidence?" Hoto queried.
"Why insist on something that the market is rejecting? Why give exporters money instead of making fiscal intervention," asked the FML boss, one of the country's most respected financial experts running the country's second largest portfolio after Old Mutual.
At that point, Chanakira asked financial experts to show by raising their hands if they were in support of bond notes.
Only one person raised his hand.
Financial experts feared that instead of tackling the underlying problems that have resulted in company closures and record unemployment, bond notes would be the last nail on the coffin of the tottering economy.
Described as a "surrogate currency" by President Robert Mugabe, the bond notes have been seen as a backdoor strategy by government to bring back the domestic currency, which was ditched in 2009 after hyperinflation, estimated at 500 billion percent in 2008.
Government insists it will print an equivalent of US$200 million in bond notes as an incentive to support exporters through a US$200 million facility from the African Export and Import Bank. The incentive would be in the form of a five percent bonus for exports.
"Why not give the exporters the yen, pula or the rand? This is the message coming from the market," said Chinakira, an economist and banker.
Another financial expert asked if the RBZ had looked at other options before settling on the introduction of bond notes.
"Bond notes have not been introduced yet and the governor is aware of the concerns that are coming," said a central bank represantantive.
The financial experts spoke as the Speaker of the House of Assembly, Jacob Mudenda, hit out at government for introducing bond notes while addressing a Zimbabwe National Chamber of Commerce conference in Victoria Falls.
Source - FinGaz
