Man­gudya bets job on bond notes

Chronicle (Zimbabwe) - - Business Chronicle - Bianca Mlilo

RE­SERVE Bank of Zim­babwe (RBZ) Gov­er­nor Dr John Man­gudya says he is ready to re­sign from his post if the bond notes strat­egy fails. Zim­babwe is ex­pected to start us­ing bond notes next month as part of the cen­tral bank’s ex­port bonus s cheme aimed at stim­u­lat­ing pro­duc­tion while main­tain­ing and sus­tain­ing the multi-cur­rency sys­tem, which the coun­try adopted in 2009.

The bond notes are backed by a $200 mil­lion African Ex­port Im­port Bank (Afrex­im­bank) nos­tro sta­bil­i­sa­tion and ex­port fi­nance fa­cil­ity.

The move is also ex­pected to ease cash short­ages blight­ing the econ­omy and deal with the prob­lem of money laun­der­ing and ex­ter­nal­i­sa­tion.

Dr Man­gudya, in an en­gage­ment with play­ers in the min­ing sec­tor in Zvisha­vane last Thurs­day, al­layed fears over the use of bond notes and as­sured the na­tion that the strat­egy would im­pact pos­i­tively on the econ­omy.

“I know peo­ple went through dif­fi­cult times in 2007-8 but this is dif­fer­ent. On this mat­ter (bond notes), the buck stops here. We do not want this idea of giv­ing peo­ple prob­lems, which I make my­self,” said Dr Man­gudya.

“Give us a chance to do what is right for this econ­omy, to put it back on track. If these pol­icy mea­sures fail, if the bond notes do not work out, I’m will­ing to re­sign be­cause I am gen­uine about get­ting the econ­omy back on track.”

The apex bank chief said while pes­simists were look­ing at the end re­sult of the bond notes and think­ing it was a back-door way of re-in­tro­duc­ing the Zim­bab­wean dol­lar, he was look­ing at the in­trin­sic value of the pol­icy, which was to in­crease pro­duc­tion and for­eign cur­rency earn­ings in Zim­babwe.

Dr Man­gudya chal­lenged ac­coun­tants and lawyers to form an in­de­pen­dent board, which would mon­i­tor the cir­cu­la­tion of the bond notes, so as to en­sure trans­parency, ac­count­abil­ity and that the amount spec­i­fied, $200 mil­lion, would not be ex­ceeded.

He also said he was “very se­ri­ous and sin­cere on the re­build­ing of the coun­try’s econ­omy” and ap­pealed for sup­port from all Zim­bab­weans.

He said there was a need for in­creased do­mes­tic pro­duc­tion by dif­fer­ent sec­tors of the econ­omy that would be sup­ported by the Buy Zim­babwe Cam­paign, a con­cept cham­pi­oned by Mun­yaradzi Hweng­were and his as­so­ciates in sup­port of con­sump­tion of lo­cal prod­ucts and ser­vices.

The bond notes would be is­sued at par with the US$ in the same man­ner the bond coins have been op­er­at­ing. This, there­fore, means the bond notes will have the same value as the United States dol­lar.

Bond notes de­rive their value from the nos­tro sta­bil­i­sa­tion and ex­port fi­nance fa­cil­ity, which caps the amount of bond notes to be is­sued.

As such, the bank can­not is­sue bond notes in ex­cess of that amount. Fur­ther­more, the apex bank has said it will not is­sue bond notes when there are no ex­ports. — @Bian­caMlilo

Dr John Man­gudya

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