Bond notes a success — Mangudya - Zimbabwe Situation

Bond notes a success — Mangudya

Source: Bond notes a success — Mangudya | Herald (Business)

Africa Moyo Senior Business Reporter
RESERVE Bank of Zimbabwe (RBZ) Governor Dr John Mangudya insists bond notes did not fail as an export incentive, but were a major success as evidenced by the rise in foreign currency receipts since their introduction. Dr Mangudya said this in Parliament yesterday during a tense Public Accounts Committee hearing.

Dzivaresekwa MP Edwin Mushoriwa asked Dr Mangudya why he had not resigned after the bond notes had allegedly failed, as he had “promised” to do.

But the combative central bank boss stood his grounds insisting “bond notes had not failed”.

“For starters people always want to put words in my mouth. What I said and repeat today under oath is, ‘if the bond note, as an export incentive scheme fails to promote exports in this country, I will resign”.

However, PAC chairperson Mr Tendai Biti interjected and read a statement attributed to Dr Mangudya, published on September 16, 2016, which reads: “On this matter (bond notes), the buck stops here. We do not want this idea of giving people problems, which I make myself. Give us a chance to do what is right for this economy, to put it back on track.

“If these policy measures fail, if the bond notes do not work out, I’m willing to resign because I am genuine about getting the economy back on track.”

Dr Mangudya immediately leapt to his defence, saying; “Mr Chairman, that’s what I am saying, ‘if the bond note fails to do its work, which was to promote exports’ (I will resign)”.

“Mr Chairman, on this one we can disagree because for me it was very simple. The export incentive scheme in this country has worked. “We need to go and call companies that are exporting, and bring them here with me and (say) whether (or not) the incentive scheme failed.

“People do not know the genesis of bond notes. The bond note is monetising the export incentive scheme. The reason why we were giving them 5 to 10 percent was to promote exports.”

Dr Mangudya said many companies increased export receipts, hence the forex that the country has been using to import products such as fuel and raw materials.

Bond notes were introduced on November 28, 2016 but the export incentive was back-dated to May 2016.

In the 2018 Mid-Term Monetary Policy Statement presented on October 2, Dr Mangudya said a combined $743,2 million incentive was paid out to exporters who earned US$12,6 billion in forex.

“I can bring them (exporters) here to this committee, one by one and talk about whether this export incentive has failed. It is in the eyes of people who don’t understand what the purpose for the bond note, why it was put in place.

“We went on a media campaign Mr Chairman, and you say it failed to work, but as far as I am concerned; to have the foreign currency that we have got today, I can mention companies who were not even exporting, that have responded very well. So the answer in simple terms is that bond notes did not fail,” said Dr Mangudya.

Mr Biti then rephrased the question to say the 1:1 value of the US dollar and bond notes failed, to which Dr Mangudya insisted it did not fail.

“Mr Chairman, understand some bit of economics,” said Dr Mangudya, drawing an immediate retort from Mr Biti who said, “I do understood economics”.

Dr Mangudya said there is $437 million worth of bond notes and total banking sector deposits of $10 billion, implying that “what has failed is not bond notes, what happened is that the economy expanded much more than the forex generated”.

“It’s a failure of the economy to generate much foreign currency to maintain its (1:1) parity (due to Government expenditure),” said Dr Mangudya. The session was deferred to next Monday, subject to confirmation by RBZ officials.

COMMENTS

WORDPRESS: 3
  • comment-avatar
    ace mukadota 7 months ago

    This Comrade Doctor John “Bond” Mangudya PhD ( Univ of the Caribbean) is a funny guy with little intelligence – saying things like this only make him look a buffoon but it also proves that ZW is a circus run by clowns

  • comment-avatar
    mazano rewayi 7 months ago

    We from the village do not understand any bit of economics. But if we earned US$12.6 billion surely we can afford a bit of fuel. And, we do not need to beg anybody, we should be lending others!

  • comment-avatar
    Ndebele 7 months ago

    Correct. From the point of view of the Banana Republicans it has been a success. ED, Shiri, Strive, Magudya, Mugabe and Gideon Gonzo all have had free access to the Bond Norte printing Press to suck genuine US Dollars from the people. That done – they have now devalued the RTGS/Bond Note by 60% because they have printed so money. Chombo got his fair share with millions found in his house – and even good old Bob had a million US dollars at his home in Kutama. It has been a successful Great Robbery by all the Banana Republicans. I wonder if Eddie Cross will commend them or condemn them?.