Employers not worried by bond notes, RTGS devaluation

The floating of RTGS dollars will have minimum effect on employers despite the rising inflation, which reached record levels since the introduction of the multi-currency regime 10 years ago, an employer organisation has said.

Zimbabwe's central bank yesterday announced a raft of measures to stabilise the economy which included floating the bond note on the formal market to correct market pricing distortions.

This comes amid concerns that the devaluation of bond notes and RTGS was going to erode salaries for employees hence exerting more pressure on employers to review salaries upwards.

Presenting his Monetary Policy Statement yesterday, RBZ governor John Mangudya announced the denomination of the existing RTGS balances, bond notes and coins in circulation as "RTGS dollars" in order to establish an exchange rate between the current monetary balances and foreign currency.

The RTGS dollars thus become part of the multi-currency system in Zimbabwe.

The rate of the RTGS will be driven by the market. The legal instrument to give effect to this has been prepared and the RTGS dollars shall be used by all entities for the purposes of pricing of goods and services, record debts, accounting and settlement of domestic transactions.

The use of RTGS dollars for domestic transactions will eliminate the existence of the multi-pricing system and charging of goods and services in foreign currency within the domestic economy.

Israel Murefu, the acting president of the Employers' Confederation of Zimbabwe, told Business Times that the effect of the devaluation of the bond notes and RTGS will be minimal because most companies had already devalued the currency in terms of the pricing on the market of late.

"Manufacturers and retailers had already increased prices to match the parallel market rates, so for us we think there will be a minimum impact to employers. It's a situation that we were already in." said Murefu.

The RBZ took note of the contributions from its stakeholders on the need to establish an inter-bank foreign exchange market to formalise the selling and buying of US dollars through banks and bureaux de change.

Dr Mangudya said this was essential in order to bring sanity in the foreign currency market while at the same time promoting exports, diaspora remittances and investments for the good of our national economy.

The central bank considered the implications – accounting, financial, economic, legal and social – that are embedded in the establishment of an inter-bank forex market within the context of the current national payment systems made up of RTGS, mobile payment platforms, point of sale (POS), bond notes and coins.

After taking account of the implications and putting in place safeguards to maintain stability in the fares market, the RBZ, with immediate effect, announced the establishment of an inter-bank foreign exchange market in Zimbabwe to formalise the trading of RTGS balances and bond notes with the USD and other currencies on a willing-buyer willing-seller basis through banks and bureaux de change.