Source: US$94 million bond notes in circulation – RBZ | The Financial Gazette February 7, 2017
THE release of US$5 bond notes worth US$15 million by the Reserve Bank of Zimbabwe (RBZ) last week brought to US$94 million the total amount of bond notes in circulation.
Long term confidence in the notes is expected to be determined by how accountable the monetary authorities are going to be seen by members of the public and the extent of likely inflationary pressures.
The bond notes are anchored to a US$200 million Afreximbank export promotion facility.
They are pegged 1:1 to the US dollar. Industry is currently pushing for the export incentive to be moved to 10 percent from the current five percent.
RBZ governor John Mangudya said the US$5 bond notes brought the total amount of bond notes in circulation to US$94 million (from US$79 million at the last release).
He said the security features on the bond notes are the same as on the $2 bond note except that the new notes are in purple.
The public is also expecting to see the composition of the bond notes committee that will oversee the administration of the notes in the economy.
There is already a process going on to draft a legislation that is going to govern the operations of this committee. What is however worrying is that close to half of the bond notes are already in circulation while this important committee is not yet in place. Be that as it may, the central bank is already empowered by the constitution to “protect the currency of Zimbabwe in the interest of balanced and sustainable economic growth”.
While the issuance of bond notes in limited amounts in the short-term could relieve some liquidity pressure, it will not address the underlying causes of the foreign exchange shortages.
The International Monetary Fund recently said more reforms are needed to deal with the foreign currency shortages. “As we have said before, policy action is needed to reduce the budget deficit; accelerate structural reforms; and re-engage with the international community to access much needed financial support”.
“All the elements in this three-pronged approach are essential to place the economy on a sustainable footing and lay the groundwork for growth and poverty reduction. Without reforms, risks are increasingly on the downside” said the IMF.
COMMENTS
It’s a game of pass the parcel: you don’t want to be the one holding bond notes when the music stops………..
The Zimbabwean people just handed $94 million to Bob and his cronies, to continue spending and pilfering.
They SAY they will stop at $200 million: here’s predicting a ‘new’ Afrexim Bank ‘guarantee’ for whatever amount the Zanu thieves need. Rinse and repeat.