Bond notes law pro­mul­gated

Chronicle (Zimbabwe) - - Business Chronicle - Harare Bureau

PRES­I­DENT Mu­gabe has gazetted Statu­tory In­stru­ment 133 of 2016, which pro­vides a le­gal frame­work for the in­tro­duc­tion of bond notes as ac­cept­able le­gal ten­der in Zim­babwe.

SI 133 of 2016, Pres­i­den­tial Pow­ers (Tem­po­rary Mea­sures) Amend­ment of the Re­serve Bank of Zim­babwe Act, em­pow­ers the cen­tral bank to is­sue out bond notes us­ing its pre­ferred de­sign, form and ma­te­rial. Sec­tion 44B of the amend­ment reads: “The Min­is­ter may by no­tice in a Statu­tory In­stru­ment pre­scribe that a ten­der of pay­ment of bond notes and coins is­sued by the Bank that are ex­change­able at par value with any spec­i­fied cur­rency other than Zim­bab­wean cur­rency pre­scribed as le­gal ten­der for the pur­poses of sec­tion 44A, shall be le­gal ten­der in all trans­ac­tions in Zim­babwe to the same ex­tent as that pre­scribed cur­rency.”

In terms of the statu­tory in­stru­ment, RBZ will de­ter­mine how the bond notes and coins will look.

“There hereby is­sued by the Min­is­ter in terms of sec­tion 44B (1) of the prin­ci­pal Act as in­serted by these reg­u­la­tions bond notes in such units as shall be spec­i­fied by the Bank and whose de­sign, form and ma­te­rial shall be de­ter­mined by the Bank and no­ti­fied to the pub­lic.”

The Statu­tory In­stru­ment, for the avoid­ance of doubt, also cov­ers bond coins that are al­ready in cir­cu­la­tion.

“The is­suance of the bond notes re­ferred to in the fol­low­ing sub­sec­tions; and the bond coins in cir­cu­la­tion be­fore the pro­mul­ga­tion of these reg­u­la­tions, shall be deemed to have been pre­scribed by the Min­is­ter in terms of Sec­tion 44A (1) of the prin­ci­pal Act as in­serted by these reg­u­la­tions.”

Fi­nance and Eco­nomic De­vel­op­ment Min­is­ter Pa­trick Chi­na­masa said SI 133 of 2016 gave the RBZ power to in­tro­duce bond notes and coins with a 1:1 rate against the United States dol­lar.

He said cred­i­tors were com­pelled to ac­cept pay­ment in bond notes.

“If one owes you money in United States dol­lars, you must ac­cept pay­ment in bond notes. You can­not refuse.

“One would have dis­charged his or her obli­ga­tion to you,” he said.

In a state­ment is­sued Mon­day evening, Min­is­ter Chi­na­masa said RBZ would now go ahead to in­tro­duce the bond notes with­out any hin­drances.

“The Re­serve Bank of Zim­babwe will with im­me­di­ate ef­fect start the process to­wards is­suance of bond notes as a le­gal ten­der in Zim­babwe. The process will com­mence with me­dia pub­lic­ity to in­form and raise aware­ness of the pub­lic on the de­nom­i­na­tions, de­sign, form, ma­te­rial and se­cu­rity fea­tures which are used in the bond notes to be in­tro­duced.

“This is to en­sure that the pub­lic is not duped by fake bond notes that may be cir­cu­lated into the market by un­scrupu­lous el­e­ments in our so­ci­ety,” reads the state­ment.

Min­is­ter Chi­na­masa said Pres­i­dent Mu­gabe pro­mul­gated the law as a crit­i­cal eco­nomic re­cov­ery mea­sure.

“Given the crit­i­cal­ity of the is­suance of bond notes as le­gal ten­der to the re­cov­ery of our econ­omy and also the con­tro­versy that has sur­rounded the sub­ject mat­ter, it has been de­cided that the le­gal­ity of bond notes as le­gal ten­der in Zim­babwe should be put beyond any mea­sure of doubt. It is to this ef­fect that the Pres­i­dent has to­day gazetted Statu­tory In­stru­ment 133 of 2016, Pres­i­den­tial Pow­ers (Tem­po­rary Mea­sures) (Amend­ment of Re­serve Bank of Zim­babwe Act and Is­sue of Bond Notes) Reg­u­la­tions, 2016. The mea­sures that have been gazetted un­der Pres­i­den­tial Pow­ers Reg­u­la­tions will for­tify and un­der­pin the ex­ist­ing le­gal frame­work for the is­suance of bond notes,” he said.

When the Re­serve Bank of Zim­babwe is sat­is­fied that the pub­lic is suf­fi­ciently con­ver­sant with the salient fea­tures of the bond notes, it will pro­ceed to is­sue them in line with the Ex­port In­cen­tive Scheme.

The cen­tral bank, Min­is­ter Chi­na­masa said, had rec­om­mended the Ex­port In­cen­tive Scheme in terms of Sec­tion 49 of the Re­serve Bank of Zim­babwe Act (Chap­ter 22:15) to boost the coun­try’s re­serves through in­creased ex­port earn­ings.

He said the Ex­port In­cen­tive Scheme would there­fore rem­edy the de­cline of re­serves, which had a neg­a­tive im­pact on the coun­try’s abil­ity to make prompt set­tle­ments of its in­ter­na­tional obli­ga­tions.

Min­is­ter Chi­na­masa said un­der ex­ist­ing leg­is­la­tion the Re­serve Bank of Zim­babwe had power to is­sue bond notes in terms of the pro­vi­sions of Sec­tion 7 of the Re­serve Bank of Zim­babwe Act Chap­ter (22:15).

The bond notes, which are guar­an­teed by a $200 mil­lion African Ex­port Im­port Bank (Afrexim) loan fa­cil­ity, will be at par with the US dol­lar.

Bond notes will be first in­tro­duced in $2 and $5 de­nom­i­na­tions be­fore grad­u­ally rolling out the $10 and $20

notes. The first phase of the bond notes in­tro­duc­tion will see $75 mil­lion be­ing re­leased by end of De­cem­ber this year.

Min­is­ter Pa­trick Chi­na­masa

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