HARARE – Reserve Bank of Zimbabwe (RBZ) governor John Mangudya yesterday dismissed rumours about the return of the discredited Zimbabwe dollar (ZW$) following vicious rumours that were making the rounds in the market.
Early this month, Mangudya announced the RBZ was set to print bond notes under a $200 million Afrexim Bank-backed bond in the form of a five percent bonus to exporters, but the development was interpreted by some quarters as an attempt to sneak the local currency through the back door.
“The RBZ would like to assure the public that such rumours are unfounded. The multi-currency is here to stay. The rumours should be dismissed with the contempt that they deserve,” Mangudya said in a statement released last night.
He said the payment of the five percent bonus to exporters was necessary to sustain and safeguard the multi-currency system in Zimbabwe, with export vouchers expected to be disbursed in October 2016.
Zimbabwe — which abandoned its currency in 2009 and adopted nine currencies as legal tender in a multi-currency economy — still has fresh memories of the 2008 hyper-inflationary era were everyone in the country was a billionaire using the country’s worthless ZW$.
The proposed bond notes, to be printed in Germany, are set to make up a tiny fraction of the over $6 billion cash in circulation.
“There is nothing like the return of the Zimbabwe dollar as the country shall continue to use the multi-currency system. We have assured the public before and we would like to continue to do so that the country’s economic fundamentals do not support the return to the ZW$,” the central bank chief said.
According to Mangudya, the purpose of bond notes is to deal with an incentive for exporters, who are the primary cash providers in the economy.
“The public should not confuse the export incentive or bonus scheme to be paid to exporters in the form of export vouchers called bond notes to assist exporters to generate more foreign exchange as a return to the local currency,” he said.
The bond note incentive set the nation into a panic frenzy with depositors rushing to withdraw their hard-earned monies from financial institutions — sparking fears of bank run-ins.
“The unnecessary large withdrawals witnessed over the past two days are therefore unwarranted.
“The market should remain calm and conduct business in the normal manner. RBZ has imported sufficient US$ cash to meet normal requirements for the banking public. Unnecessary withdrawals are therefore counterproductive to the bank’s cash importation programme,” the central banker said.
Mangudya also pleaded with businesses, urging them to bank their cash takings in line with the Bank Use Promotion Act to avoid incidences of money laundering and haemorrhaging the multi-currency system.
Long winding queues have been the order of the day as most depositors rush to get their hands on the little money left in the formal banking channels. Some banks have also stopped disbursements, a situation that has worsened public sentiment around the proposed bond notes.
So dire is the situation that local banks have been pleading with clients who handle cash to bank their monies, as retailers and wholesalers are skirting these financial institutions as corporates now have a $1 000 withdrawal limit per day.
This comes as the Confederation of Zimbabwe Industries (CZI) recently said Zimbabweans must embrace the proposed bond notes, saying they will boost internal trade and ease the cash crunch threatening Zimbabwe’s already lethargic economy.