Source: RBZ to import small US$ denominations | The Herald June 10, 2016
THE Reserve Bank of Zimbabwe will import, largely, low dollar denominations to curb the incessant large scale outflow of US dollars This comes as the central bank is working on introducing bond notes, backed by a $200 million Afreximbank facility to bridge the cash and liquidity gap and also provide an export incentive to stimulate and grow the economy.RBZ foreign exchange control director Mr Morris Mpofu said large denominations such as the $50 and $100 notes appeal to people who are moving the cash out of the country.
Mr Mpofu said that this is largely because the dollar is attractive to international criminals and others who are hunting it while there is concentration pressure from the predominant use of the greenback as the transacting currency.
The US dollar accounts for over 95 percent of all transactions in Zimbabwe although the country uses a basket of currencies that also include the South African rand, where the bulk of imports come from and exports go.
According to the RBZ’s monetary policy, a total of $1,8 billion was taken out of Zimbabwe in 2015 alone through illicit financial outflows and together with the huge import bill, have worked to create the cash and liquidity problems.
“That is why, now, we are going to import small denominations; $1, $5, $10 and $20, which they cannot take out.
The $100 and the $50 (notes) are what they get attracted to and they ship it out (of Zimbabwe) anytime.
“(But the small denominations) they are heavy, they are bulky so it is not easy to carry them in a briefcase for purposes of moving huge amounts of money (especially much sought after US dollars out of Zimbabwe), Mr Mpofu said.
The RBZ exchange control director was briefing Acting Japanese Ambassador to Zimbabwe Dabide Tsunakake who sought clarity on what he said were some of the fears among investors from Japan looking to invest in Zimbabwe.
The investors’ concerns included the plans to introduce bond notes, general macro-economic situation and the indigenisation and economic empowerment policy position.
The rampant illegal shipping of the greenback out of the country, Mr Mpofu said, had created shortage of cash and liquidity, which the RBZ is addressing in a number of ways.
He stressed bonds notes were not only meant to address the prevailing widespread shortage of bank notes, but to grow exports, which would improve the liquidity and cash situation.
“The bond note is being created to give the exporters an export voucher as an incentive so that they become competitive, they increase exports. We need to boost our exports so that we earn more dollars because we want, ultimately, to make US dollar reserve currency,” he said.
COMMENTS
The ‘international criminals’ are all right here in Zimbabwe, and how can it be illegal to ‘rampantly’ take another country’s currency out of the country? Is it not illegal to attempt to control the movement of something that doesn’t belong to you?
And won’t these international criminals soon catch onto the idea that large amounts of the heavy $1-5 notes can be easily transported in wheelbarrows by non-executive types who don’t own briefcases?
I wanted to confirm that the USD shortage was only in cash amounts? In other words, is it still easy for a company to wire or electronically transfer large USD balances to overseas suppliers?
When T-bill’s are redeemed for US Dollars, can the seller collect the millions via USD wire to an overseas account (are the dollars really there)?
How are people “stealing” USD that are already theirs? This is what I find confusing about all this… I’m assuming that whatever USD deposits are in electronic form are backed by Nostro / hard USD balances. If so, you should be able to convert all USD in circulation into cash USD if needed pretty easily – how can there be a shortage?
All someone who is withdrawing a balances wants is something which is already theirs…
The only risk to using US Dollars is if the cashless or paperless money is faked by someone like the central bank (they take the USD and spend it on their own expenses). Then if someone tries to withdraw it it would be gone. But the govt has been clear that they are not doing anything like that (taking RTGS float, blocking international large dollar outbound wires etc).
That is exactly what they have done. And look at the arrogance displayed by the chief baboon that has been benefiting from all that. I have never heard him talk economics even though he claims to have 7degrees…economics included. That is the cash he uses to go to Singapore to see his muzukuru while things are dying here.
what. Zim needs is pronoting our kocal manufacturers so as to curb imports. at all cost. That takes patriotic leaders who stop at nothing to make. things right even if it means stepping down fir the good of our Zim. I