FINANCE Minister Patrick Chinamasa says the government made a “mistake” when it prematurely pronounced the introduction of bond notes before ascertaining the possible issuance date with the printers.
The Reserve Bank of Zimbabwe (RBZ) unveiled the $200 million bond note strategy, a critical economic initiative meant to ease cash shortages, buttress the multiple-currency system and boost domestic production through exports, in May this year. They were to be introduced in July but the date was later moved to October.
Critics have queried why it was taking long to circulate the proposed notes while some still question the merit of the approach. The debate spilled to the Upper House where Senators last Thursday asked Minister Chinamasa to explain the delay in issuing the new notes given the persistent cash shortage.
“Yes, it’s correct that we should expect issuance of bond notes towards end of September-beginning of October. This is so because, to get bond notes printed, it goes through various stages, which include designing, origination and then printing. The firm authorised or contracted to produce the bond notes advised us that it would take that long,” he responded.
“My apology of course is that I’ve admitted on other forums and I think it’s a mistake. The mistake was that we made a pronouncement on the issuance of bond notes prematurely. I would have much preferred, with the benefit of the hindsight that we had done so almost about the time we were issuing.”
The senators challenged the Ministry of Finance and the RBZ to increase awareness campaigns and educational programmes on bond notes to clear negative perceptions about the initiative and ensure every Zimbabwean supported it. This is because some are alleging that the notes signal the return of the local currency.
However, the central bank, backed by economic experts, bankers and different business associations, have allayed the fears insisting that the multiple currency system was there to stay and that a local currency could not be hurriedly introduced without supporting economic fundamentals.
Similar to bond coins that were introduced last year, the RBZ has said bond notes would be indexed at par with the US$ in terms of value to facilitate local transactions. Minister Chinamasa also assured the banking and transacting public that bond notes will not lose their value when they are introduced.
“So, the value will not change, when the bond notes are issued, they are only issued as an incentive to exports. When we issue the bond notes, they’re only going to be relative to the volume of exports that are being generated,” said the minister.
“The reality is that the bond notes are interchangeable to the US$, which is why they are backed by a $200 million facility from Afrexim Bank. So, in value they are interchangeable.”
The move is also expected to curb externalisation of funds given that circulation of bond notes will be limited to Zimbabwe. Minister Chinamasa stressed the need for all Zimbabweans to use plastic money and ease demand for hard cash.
“As I speak, over the past four or five weeks, we’ve seen a quantum leap in the usage of plastic money – an increase of more than 400 percent,” he said. “We’re encouraging Senators here to resort to the use of plastic money because this will reduce the demand on the US dollar, which as you all know, we do not print.” chronicle