Bond notes to start in August

Bond notes will start circulating around August 2016 - and not June as previously projected - as their production takes at least four months, central bank Governor Dr John Mangudya has said.

Government has also ruled out reintroducing the Zimbabwe dollar "anytime soon", saying the multi-currency system will remain operational even when bond notes come aboard.

The IMF, an official said, supported introduction of bond notes and was satisfied that Zimbabwe's authorities would deal with all monetary issues transparently.

Zimbabwe has been grappling with cash shortages since April, a situation attributed to illicit financial flows, a huge trade deficit and the lack of a savings culture.

The Reserve Bank of Zimbabwe plans to partly remedy this with bond notes and uptake of foreign currencies alongside the United States dollar, which is aggresively sought domestically and regionally.

The bond notes will be backed by a US$200 million Africa Export-Import Bank facility; and printed in US$2, US$5, US$10 and US$20 denominations.

Dr Mangudya told The Sunday Mail that experts were desigining the new notes, with other processes to be wrapped up in four to five months.

In the interim, he said, authorities would import additional cash and promote the full basket of currencies.

"The procurement of bond notes takes a while as it involves designing, origination and printing. The minimum time it takes to procure such security documents is between four and five months … in the meantime, we will import more cash.

"It was noted that there was need to build on the confidence in Zimbabwe by ensuring issuance of bond notes is transparent, verifiable with concrete checks and balances. International financial institutions are, therefore, seized with that matter as Zimbabwe is undergoing economic programmes with them.

"The bond notes are for funding the export incentive scheme to support exporters. Enhancing exports is necessary to maintain and sustain the multi-currency system."

Finance and Economic Development Minister Patrick Chinamasa said bond notes were aimed at restoring the multi-currency system and not reintroducing the Zimbabwe dollar.

"Let me emphasise it again: There is no return of the Zimbabwe dollar; there is no question about that. The multi-currency regime is here to stay. The issue is that we had developed into a mono-currency economy whereby we had the US dollar on 97 percent circulation.

"Yet, when we introduced the multi-currency regime in 2009, the US dollar and the South African rand were 50-50 on the market."

RBZ Deputy Governor Dr Kupukile Mlambo said the dispensation was foolproof and discounted claims it would oil the currency parallel market.

"We are going to be transparent; remember, we are also under a Staff Monitored Programme of the IMF. So, they, too, also monitor these things to check if they are all transparent. Everything is above board.

"We do not think there will be a black market. There won't be many of (these bond notes). (Money changers) will be disappointed because we are not removing the US dollar or South African rand, but maintaining the multi-currency system.

"So, anyone who wants to travel to South Africa, the United Kingdom or any other country can go to their bank and get their dollars. The only important thing to note regarding that matter is that the bond notes will circulate within Zimbabwe only."

Dr Mlambo went on: "Let it be known that we understand why people are worried. They are worried because we lost our local currency in 2008. But this is a new dispensation. We have put in place safeguards to make sure that we do not overprint. This is an export incentive scheme that gives the exporter up to 5 percent of their export revenues.

"We want to make sure the notes are not printed in Zimbabwe, but printed outside the country. So, we are taking all these measures to ensure there is no confidence run on the notes."