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Retailers give thumbs up bond notes
27 May 2016 at 06:35hrs | Views
THE Confederation of Zimbabwe Retailers (CZR) says the introduction of bond notes will enhance business operations and ease foreign exchange pressures.
Reserve Bank of Zimbabwe (RBZ) governor John Mangudya earlier this month announced proposals to introduce bond notes in two months time, which are backed by a $200 million facility from the Afrexim Bank.
The move is expected to curb externalisation of money with reports indicating close to $2 billion was smuggled out of the country last year alone.
About $1,2 billion of that money was externalised by corporates.
The bond notes proposal has, however, been received with mixed feelings amid fears it would cause inflation typical of the 2008 situation.
CZR president Denford Mutashu told Business Chronicle there was no need for panic over bond notes saying the initiative was good for the economy.
"There's no need for the public to panic because the government and the RBZ gave an undertaking. The RBZ asked retailers to come up with multi-currency pricing as a way of trying to spread the demand for the US$ and counter the panic gripping consumers," said Mutashu.
"Since the announcement by the RBZ, there's been an annex withdrawal from financial institutions by the public. We expected to see a corresponding increase in sales but it wasn't to be."
He said the multi-currency pricing was workable given the concentration and demand for the US$.
Mutashu also said there was a lot of interest from regional countries which were bringing in cheap goods of inferior quality. He said these were also responsible for the outflow of the US$ from the country.
"What we'll have is a scenario where prices are in US$ and in bond notes and this will also smoothen RTGS transactions and also deal with contingency challenges," Mutashu said.
"This will also deal with the issue of externalisation of funds by retailers."
Mutashu castigated retailers who had increased prices of some goods such as cooking oil which went up by a margin of 5-10 percent, saying it was not something they expected to see because the bond notes were not a justification for price increases.
This, he said, was counterproductive to the central bank's efforts to promote the widespread use of multi-currencies to resolve the current cash shortages and curb illicit money flows.
Reserve Bank of Zimbabwe (RBZ) governor John Mangudya earlier this month announced proposals to introduce bond notes in two months time, which are backed by a $200 million facility from the Afrexim Bank.
The move is expected to curb externalisation of money with reports indicating close to $2 billion was smuggled out of the country last year alone.
About $1,2 billion of that money was externalised by corporates.
The bond notes proposal has, however, been received with mixed feelings amid fears it would cause inflation typical of the 2008 situation.
CZR president Denford Mutashu told Business Chronicle there was no need for panic over bond notes saying the initiative was good for the economy.
"There's no need for the public to panic because the government and the RBZ gave an undertaking. The RBZ asked retailers to come up with multi-currency pricing as a way of trying to spread the demand for the US$ and counter the panic gripping consumers," said Mutashu.
"Since the announcement by the RBZ, there's been an annex withdrawal from financial institutions by the public. We expected to see a corresponding increase in sales but it wasn't to be."
He said the multi-currency pricing was workable given the concentration and demand for the US$.
Mutashu also said there was a lot of interest from regional countries which were bringing in cheap goods of inferior quality. He said these were also responsible for the outflow of the US$ from the country.
"What we'll have is a scenario where prices are in US$ and in bond notes and this will also smoothen RTGS transactions and also deal with contingency challenges," Mutashu said.
"This will also deal with the issue of externalisation of funds by retailers."
Mutashu castigated retailers who had increased prices of some goods such as cooking oil which went up by a margin of 5-10 percent, saying it was not something they expected to see because the bond notes were not a justification for price increases.
This, he said, was counterproductive to the central bank's efforts to promote the widespread use of multi-currencies to resolve the current cash shortages and curb illicit money flows.
Source - chronicle
