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The ineffectiveness of increasing Bond notes supply - Tapiwa Mashakada

by Stephen Jakes
05 Aug 2017 at 20:15hrs | Views
MDC-T deputy secretary general Tapiwa Mashakada has described the introduction of more bond notes as insensitive and ineffective.

The Reserve Bank of Zimbabwe announced that it will feed into the economy $300 million worth of bond notes.

"The RBZ's hands are tied. They can only increase bond notes within the confines of the USD200 million Afreximbank facility which is for export incentivization. In order to make an impact on the liquidity crunch the RBZ would need to inject at least $1billion as money supply but this wont happen because the economy is not producing the goods required to meet the monetary demand. So for now it is a zero sum game," Mashakada wrote on Facebook.

"Few money is chasing high demand and there is a problem. Dollarization is system that can only be sustained by rules that are based on the promotion of an export-led growth and attraction of foreign direct investment. The government is neglecting the manufacturing sector which produces exports choosing to focus on mining alone which is inadequate."

He said the increase in bond notes is a palliative relief whose effectiveness is blunted by the limitation of the Afreximbank facility.

Source - Online