Chinamasa casts doubt over bond notes

FINANCE minister Patrick Chinamasa has indicated that the bond notes are not likely to hit the market anytime soon, as government is yet to finalise modalities for the introduction of the currency.

Source: Chinamasa casts doubt over bond notes – NewsDay Zimbabwe October 22, 2016

by PAIDAMOYO MUZULU

Chinamasa, who has been taken to the High Court over the introduction of the bond notes alongside Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya, told the court the facility was still a concept that was yet to be put through a test.

“The parameters within which the bond notes shall be introduced and implemented are still at conceptualisation stage and nothing is as yet, cast in stone in this regard,” he said in his opposing affidavit in papers filed with the High Court on October 6.

The Finance minister further cast doubts that the bond notes would be introduced in November, claiming the currency was still at the planning stage.

“The proposal, which is in principle supported by the government, is still in its planning stage and shall be subjected to a rigorous procedure of approvals before it can be implemented,” he said.

In presenting the mid-term monetary policy review last month, Mangudya said bond notes would be introduced this month, although some reports say this has been moved to early November.

Before that, he had told a Press conference at the beginning of May that the bond notes were to be introduced “soon”, although he did not give a specific date.

On May 29, Mangudya then pronounced the October date, saying there was need to consider legal processes that would take about three to four months.

Caps Holdings shareholder, Frederick Mutanda, recently approached the High Court seeking the introduction of the bond notes to be declared unconstitutional.

He argued the move was likely to infringe on his constitutional rights.

Mutanda also demanded the release of the $200 million Africa Export and Import Bank (Afreximbank) loan facility agreement by the central bank governor, but the latter refused, saying it was protected by confidentiality.

“In any event, such agreement is a private agreement between the first respondent and Afreximbank. It is, therefore, subject to privacy of contract and confidentiality clauses,” Mangudya responded.

“Applicant (Mutanda) cannot compel respondents to divulge confidential information invoking irrelevant constitutional provisions.”

In his opposing affidavit, Mangudya further denied there was a cash-run on the banks, as people were trying to retrieve their money ahead of the bond notes introduction.

“No evidence, other than the applicant’s observation, is presented to support this; suffice to say there has never been any cash-run on the banks, since the policy pronouncement,” he claimed.

“To the contrary, evidence on the ground shows that deposits have gone up.”

The bank also denied bond notes would be a new domestic currency, arguing they would be a debt instrument.

“Indeed, bond notes are debt instruments, which are surrogate to the real United States dollar. Hence, they will be valued at par with the US dollar and they will operate alongside other currencies.”

Last month, outgoing Chief Justice Godfrey Chidyausiku and the full Constitutional Court bench dismissed a similar application by ZimPF leader, Joice Mujuru, arguing the court challenge was premature.