Bond notes law promulgated

Source: Bond notes law promulgated | The Herald November 1, 2016

Daniel Nemukuyu Senior Reporter—
President Mugabe has gazetted Statutory Instrument 133 of 2016, which provides a legal framework for the introduction of bond notes as acceptable legal tender in Zimbabwe. SI 133 of 2016, Presidential Powers (Temporary Measures) Amendment of the Reserve Bank of Zimbabwe Act, empowers the central bank to issue out bond notes using its preferred design, form and material.

Section 44B of the amendment reads:
“The Minister may by notice in a Statutory Instrument prescribe that a tender of payment of bond notes and coins issued by the Bank that are exchangeable at par value with any specified currency other than Zimbabwean currency prescribed as legal tender for the purposes of section 44A, shall be legal tender in all transactions in Zimbabwe to the same extent as that prescribed currency.”

In terms of the statutory instrument, RBZ will determine how the bond notes and coins will look like.

“There hereby issued by the Minister in terms of section 44B (1) of the principal Act as inserted by these regulations bond notes in such units as shall be specified by the Bank and whose design, form and material shall be determined by the Bank and notified to the public.”

The Statutory Instrument, for the avoidance of doubt, also covers bond coins that are already in circulation.

READ FULL STATEMENT HERE
READ FULL STATUTORY INSTRUMENT HERE

“The issuance of the bond notes referred to in the following subsections; and the bond coins in circulation before the promulgation of these regulations, shall be deemed to have been prescribed by the Minister in terms of Section 44A (1) of the principal Act as inserted by these regulations.”

Finance and Economic Development Minister Patrick Chinamasa said SI 133 of 2016 gave the RBZ power to introduce bond notes and coins with a 1:1 rate against the United States dollar.

He said creditors were compelled to accept payment in bond notes. “If one owes you money in United States dollars, you must accept payment in bond notes. You cannot refuse. “One would have discharged his or her obligation to you,” he said.

In a statement issued yesterday evening, Minister Chinamasa said RBZ would now go ahead to introduce the bond notes without any hindrances.

“The Reserve Bank of Zimbabwe will with immediate effect start the process towards issuance of bond notes as a legal tender in Zimbabwe. The process will commence with media publicity to inform and raise awareness of the public on the denominations, design, form, material and security features which are used in the bond notes to be introduced.

“This is to ensure that the public is not duped by fake bond notes that may be circulated into the market by unscrupulous elements in our society,” reads the statement. Minister Chinamasa said the President Mugabe promulgated the law as critical economic recovery measure.

“Given the criticality of the issuance of bond notes as legal tender to the recovery of our economy and also the controversy that has surrounded the subject matter, it has been decided that the legality of bond notes as legal tender in Zimbabwe should be put beyond any measure of doubt. It is to this effect that the President has today gazetted Statutory Instrument 133 of 2016, Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Bond Notes) Regulations, 2016. The measures that have been gazetted under Presidential Powers Regulations will fortify and underpin the existing legal framework for the issuance of bond notes,” he said.

When the Reserve Bank of Zimbabwe is satisfied that the public is sufficiently conversant with the salient features of the bond notes, it will proceed to issue them in line with the Export Incentive Scheme.

The central bank, Minister Chinamasa said, had recommended the Export Incentive Scheme in terms of Section 49 of the Reserve Bank of Zimbabwe Act (Chapter 22:15) to boost the country’s reserves through increased export earnings.

He said the Export Incentive Scheme would therefore remedy the decline of reserves, which had a negative impact on the country’s ability to make prompt settlements of its international obligations.

Minister Chinamasa said under existing legislation the Reserve Bank of Zimbabwe had power to issue bond notes in terms of the provisions of Section 7 of the Reserve Bank of Zimbabwe Act Chapter (22:15).

The bond notes, which are guaranteed by a $200 million African Export Import Bank (Afrexim) loan facility, will be at par with the US dollar. Bond notes will be first introduced in $2 and $5 denominations before gradually rolling out the $10 and $20 notes. The first phase of the bond notes introduction will see $75 million being released by end of December this year.

COMMENTS

WORDPRESS: 10
  • comment-avatar
    Joe Cool 6 years ago

    It’s about 2 weeks ago that Mangudya said “bond notes will not be forced on anyone”.

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    They all lie so much that none of them can remember what the other one said!!!

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    Morty Smith 6 years ago

    These mutton heads really think they have found a way to print their own dollars. What monumental stupidity. Prepare for though times like we have not seen before.

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    Matabele Abroad 6 years ago

    Go Zanu! Go! You guys are truly living legends – and have the sane genius capacity as Einstein – well, in your case you would qualify for the Nobel Prize for Theft, Murder and Corruption…

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    J. Pingatton 6 years ago

    If you are a cross border trader, what will you prefare between bond and rand. àWhen you come home from diaspora, during holiday with say 10000 rands will you agree to exchange your rands with the bonds at USD /Rand rate. I doubt very much. You only need to go to a flee markert and dictate the rate you want and get more bond notes and use them during your stay in Zim. This is good news for those working in SouthAfrica and Nambia. Their rand will be in demand. On the other hand bond note is bad news for our country Zimbabwe. Why can’t we use rand instead of bond notes

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    J. Pingatton 6 years ago

    I predict that Bond will sell 1 is 5 rands by February next year. Civil servants who will be paid with bond notes also want to visit other countries for shopping will be desparate for rands

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    Jono Austin 6 years ago

    So there you have it. At a stroke of the pen they are printing their usd. And you are forced to accept this toilet paper at the barrel of a gun on a 1 to 1 basis. All the stock in shops will be flattened by a Minister who has access to the toilet paper and you cannot refuse to accept the toilet paper. Inflation is going to hit the roof. This is going to collapse the economy to nothing. Start breeding rats to eat.

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    Joe Cool 6 years ago

    Better to get on and get it over with, instead of waiting in endless anticipation. Maybe this will be the one that will sink them.

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    I do not understand how these 007 notes are going to help. The idea as I read it is that; as the country is very short of actual $US greenbacks, ( in the piggy bank) these will be used for ‘export’ activities, very noble idea. But as things stand that is why you are very short of $US, by reason you import more than you export in all fields; QED You have no ‘income’. Plus suggestions are made that $US disappear through holes in the system. Therefore as the $Us in the Piggy bank are finite they will eventually run out. So immediately you provide a surrogate currency like the Z$US, yes people can use this to buy things in the shops etc and true this will release Genuine $US for export activities legitament or otherwise in the short term. The Z$US just keep circulating around the shops, VAT and tax system etc. But the Piggy bank boost is being depleted as before, so the situation is no better. It is then worse for you – do not have a reserve of mobile/ purse $US about as Z$US is not an quotable currency and you have the face value Z$US to honor with real money or goods and services. The thing that will give then is inflation. Because this is the great leveling mechanism. The real money in the world is perhaps the loaf of bread, because whatever it says on the price label, it’s still a loaf of bread.
    The offering of 5% to exporters presumable means that for each dollar they pay for things is actually a cost of Z$US+5% to the piggy. But while that maybe only on paper, as the currencies are on PAR each one of these substitute dollars is now only ‘worth’ 0.95cUS. If might say Z1$US on them but piggy had to find the 5cUS.
    The temptation have is; found short of $US is to print some more Z$US, again the loop lurches and within an even shorter time stabilizes but with even more inflation. All the time of course the real $US are still going out through the fact that when you import you are paying the supplier more than the goods actually cost him, that is business by boy. So that percentage is lost to you, you pay it all, this loss could be as high a 80% including production costs, taxes, transport etc. Remember you payed the 100% price. To say nothing of each time a real dollar bill ventures – sneaks out of the country never to return its one less to play with.
    The population will not help because the real $US is more tenable, so that is used as Mattress stuffing- the subjugate stuff is just passed on and becomes riled and devalued. It does not help if this has been done before, as memories are long when money in involved.
    In time there is so much Z$US around that the original $US are never seen and you have a completely self imposed local currency, actually on PAR to a loaf of bread at 1: bugger all, because the loaf of bread is still the same naked cost and every time you import one its costs Piggy another premium, on top of the useless toilet paper.
    As I have said the solution is in fact to get out and find and income, stop foolish spending, plug the leakage and install a frugal period of self discipline.

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    Hopefully this will be the end of them!!