Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya, cleared the air on the possible Zim-dollar come back while presenting the 2016 Mid-Term Monetary Policy Statement. He reiterated that the Zim-dollar is not coming back in the form of bond notes anytime soon until key economic fundamentals or conditions are permissive.
‘It is critical to emphasise that the introduction of bond notes does not mark the return of the Zimbabwe dollar through the back-door. The macro-economic fundamentals or conditions for the return of the local currency are not yet right to do so,’ re-asserted Dr Mangudya.
This puts to rest speculations that the Central Bank was poised to smuggle through the back-door the extinct local currency which was replaced by the multi-currency regime in 2009, after it failed to resist the hyper-inflationary business-environment which was bedevilling the economy then.
Dr Mangudya says the bond notes which will start to circulate by the end of October 2016 will be at par with the US$, that is, one-to-one. It will be used and treated in the same manner as bond coins which have been in circulation for more than a year now. Their presence improved transaction amongst the public.
Bond notes will be used to incentivise exporters at 5% of their net exports at any given time. The incentives will be paid in bond notes gradually as dictated by the rate of exportation, and the exporter’s account will be credited to their US$ accounts in US$ currency. This is a strategy to promote the turn-around of the economy by stirring productive sector which is focused on export products or services.
‘It is also important to note that bond notes shall not be forced on people who do not like them,’ Dr Mangudya reassured.
The RBZ Governor says the return of the Zim-dollar will be influenced by the following economic fundamentals or conditions; a) Minimum foreign exchange reserves equivalent to one (1) year of import cover; b) Balanced and sustainable government budget; c) Sustainable interest rates; d) High consumer and business confidence; e) Sustainable level of inflation; and f) Healthy job market.
In view of these fundamental drivers, Dr Mangudya says, ‘the country is still very far from attaining these economic fundamentals.’
Panic which had gripped Zimbabweans over the introduction of bond notes has been dissipated by creating a public awareness which enabled an appreciation of the strategy.
Source : Bulawayo24