Mthuli Ncube directs all traders to accept bond notes

Finance and Economic Development Minister Professor Mthuli Ncube has directed all traders to accept bond notes as they remain legal tender in the country.

This comes as some unscrupulous wholesalers and retailers are understood to be rejecting bond notes claiming they would soon be demonetised. Prof Ncube said it was wrong for traders to reject bond notes when no currency reforms have been instituted.

"People should accept the bond note because as of today (Tuesday) we have not changed the currency. So that is what I strongly recommend until we have come up with a package, which will have a lasting solution to currency issues," said Prof Ncube while addressing journalists in Harare on Tuesday.

Prof Ncube said currency reforms are linked with the direction of fiscal reforms. Government is working towards addressing fiscal reforms, which will eventually lead to currency reforms. ". . . it's a package that we are working on. That is the foundation of a strong currency going forward," said Prof Ncube. President Emmerson Mnangagwa confirmed during the State of the Nation address and the official opening of the First Session of the Ninth Parliament that there are no currency reforms yet.

The President said the country shall continue with the multi-currency regime until the "current negative economic fundamentals have been addressed to give credence to the introduction of the local currency".

"The economic fundamentals that need to be met are a sustainable fiscal position, foreign currency reserves of between three and six months of import cover and sustainable consumer and business confidence. "These economic fundamentals are yet to be met to justify the introduction of our own currency," said President Mnangagwa.

As currency reforms are being weighed, Government intends to accelerate the ongoing efforts towards stabilising the macroeconomic environment; creation of fiscal space; enhancing foreign currency availability; improving liquidity; boosting the country's investment attractiveness; reducing budget deficit and ensuring gradual growth of all sectors of the economy. Government, through the Reserve Bank of Zimbabwe, has negotiated foreign exchange facilities of $500 million that are designed to meet the growing demand for foreign currency by industrialists and individuals. Some of the facilities will be disbursed this week to allow companies, most of which have been hamstrung by foreign currency shortages, to access the funds and make foreign payments for raw materials and spares.

Private equity financiers are seen is critical in financing the economy going forward, as opposed to expecting much from the World Bank and the International Monetary Fund (IMF). On Monday, Government announced that it had obtained a $250 million commercial loan facility from an international finance company, the Gemcorp Group.

Prof Ncube said the "granting of the commercial loan facility by Gemcorp is a strong signal by foreign investors of their growing confidence in Zimbabwe." The facility would be used to finance the importation of essentials goods and services including electricity, fuel and medicines. Gemcorp focuses on emerging markets with a special interest in Sub-Saharan Africa, Latin America and Eastern Europe.