Business / Economy
Zimbabwe will print bank 'bond notes'
15 Sep 2016 at 20:20hrs | Views
Zimbabwe's central bank governor has ignored the protests and widespread opposition to so-called "bond notes" and said today that they will be introduced as a cash substitute next month, the AFP news agency reports.
The two, five, 10 and 20 dollar notes are being introduced as the country is suffering from a severe cash shortage.
It has forced the government to delay paying salaries each month to civil servants and those in the security forces.
These salaries have to be paid in foreign currency as Zimbabwe abandoned its own currency in 2009 in order to stem runaway inflation.
But the memories of hyperinflation, when the highest denomination was a $100 trillion Zimbabwean dollar note - and prices would go up by millions from one hour to the next - are still fresh.
Protesters fear there will a repeat of the excessive printing that led to the hyperinflation.
The plan was put forward in May and is backed by a $200m (£151m) bond facility from the African Export-Import Bank (Afreximbank).
The notes will have no value outside Zimbabwe.
Many business people in Zimbabwe are worried about the introduction of bond notes (see earlier post), fearing it is a way of reintroducing the Zimbabwean dollar. The country has mainly used the US dollar and South African rand since abandoning its own currency in 2009.
There is no disputing the cash crisis is biting in Zimbabwe.
Banks have put a cap on the amount of money people can withdraw and long queues are commonplace at most banks.
The central bank governor hopes bond notes, which will have no value outside Zimbabwe and are a cash substitute, will help exporters – because at the moment Zimbabwe imports more than it exports.
But most Zimbabweans I spoke to today are not convinced by the move, fearing a return of hyperinflation.
The two, five, 10 and 20 dollar notes are being introduced as the country is suffering from a severe cash shortage.
It has forced the government to delay paying salaries each month to civil servants and those in the security forces.
These salaries have to be paid in foreign currency as Zimbabwe abandoned its own currency in 2009 in order to stem runaway inflation.
But the memories of hyperinflation, when the highest denomination was a $100 trillion Zimbabwean dollar note - and prices would go up by millions from one hour to the next - are still fresh.
Protesters fear there will a repeat of the excessive printing that led to the hyperinflation.
The plan was put forward in May and is backed by a $200m (£151m) bond facility from the African Export-Import Bank (Afreximbank).
The notes will have no value outside Zimbabwe.
Many business people in Zimbabwe are worried about the introduction of bond notes (see earlier post), fearing it is a way of reintroducing the Zimbabwean dollar. The country has mainly used the US dollar and South African rand since abandoning its own currency in 2009.
There is no disputing the cash crisis is biting in Zimbabwe.
Banks have put a cap on the amount of money people can withdraw and long queues are commonplace at most banks.
The central bank governor hopes bond notes, which will have no value outside Zimbabwe and are a cash substitute, will help exporters – because at the moment Zimbabwe imports more than it exports.
But most Zimbabweans I spoke to today are not convinced by the move, fearing a return of hyperinflation.
Source - AFP
