RBZ to increase US dollars supply to oil in bond notes

Source: RBZ to increase US dollars supply to oil in bond notes – The Zimbabwe Independent September 2, 2016

GOVERNMENT will increase money supply to the market in United States dollar terms when it introduces bond notes in October in order to neutralise public resistance, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said this week.

By Elias Mambo

This strategy is meant also to alleviate the acute cash shortages which have resulted in long winding queues at most banks.

Government is set to introduce bond notes after the mid-term fiscal policy review which will be presented by Finance minister Patrick Chinamasa on Thursday next week. Mangudya will present his monetary policy statement soon after Chinamasa’s presentation.

Besides trying to counter public resistance to the bond notes, a significant amount of US dollars will also be introduced alongside bond notes to try to avoid the proliferation of the black market and attendant arbitrage activities.

Market players, including black market operators, have already been trying to hedge their bets since the announcement of the advent of bond notes expected in October.

Mangudya told the Zimbabwe Independent this week there is need to look at the intrinsic value of the bond notes.
“These (bond notes) will not replace the US dollar, but rather buttress it and also help to mitigate double-dipping of the nostro accounts,” he said.

“We want to put the economy back on track; so by introducing bond notes we are curbing capital flight and smuggling.

“When we dollarised in 2009, investors rushed into the market, not to invest, but to harvest the foreign currency.

In the first place we were not supposed to have utilised our reserve currency (the US dollar) as our trading currency. The narrative has to change from bond notes to production.”

The central bank chief said the country has to produce more to enhance foreign currency earnings, adding that bond notes will be used also as an incentive scheme for exporters as a production policy tool.

Mangudya pointed out that consumers will have a choice on which currency to use because all currencies will be available.

“If you go to your bank, you will tell them which currency you want so it is wrong to say we are removing the multi-currency system,” Mangudya said.

“Bond notes will be released into the market on a gradual basis in line with the level of exports. It is an export-driven scheme, implying that every bond note injected into the economy is evidence of exports within the economy.”
RBZ wants to introduce the bond notes under a US$200 million export incentive facility guaranteed by the African Export-Import Bank, as part of measures to stem cash leakages and boost exports.
Under the facility, exporters will get a 5% incentive in bond notes.

COMMENTS

WORDPRESS: 5
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    “If you go to your bank, you will tell them which currency you want so it is wrong to say we are removing the multi-currency system,” Mangudya said.”………..AND IF YOU BELIEVE THAT YOU WILL BELIEVE ANY THING……EVEN THAT ZANU PF WILL WIN THE ELECTIONS IN 2018………NO TO BOND NOTES …NO… AND THERE IS NO GOING BACK…..

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    spiralx 6 years ago

    It’s not encouraging that Mangudya is throwing around gobbledegook terminology, instead of being clear about how and in what circumstances, bond notes are useful or may take precedence. And if it’s a free choice (which doesn’t fit with the way bond notes were originally being set up, by the way) for every consumer, how does that make them practical to add into the multi-currency mix?

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    ntaba 6 years ago

    Bearer cheques again – called Bond Cheques this time round. Ama trillion dollar Gonzo notes are coming.

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    tonyme 6 years ago

    You all at the top know who is sending the money out. The major thieves are in government who care not about the nation. Identify the, try them, take their properties and lock these people up. Use their stolen wealth to pay back the nation. They are enjoying themselves to the point Mai Mphoko even says a. $2.2 million dollar house is not vice presidential while sucking up over half a million dollars in hospital expenses while on the other had the preside flies out of the country for headache treatments.

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    People do not believe anything this government says, they are so broke, nothing is done for the people, they giving the bonds to sort out and balance their externalisation. They owe so much money. They stole all our hard earned money in 2008 they are doing the same thing. Just name one success of the Government. Think people.