‘No plans to phase out bond notes’

GOVERNMENT has no plans to phase out bond notes until economic fundamentals are appropriate for the transition from the use of multiple currency, Finance and Economic Planning Minister Patrick Chinamasa said yesterday.

He said contrary to recent media reports, bond notes will continue to be used in the country.

“We refer to the article published by the Sunday Mail on January 14, 2018, purporting that Government is phasing out bond notes. Let me reiterate the fact that Government has no plans to phase out bond notes.

“As has been repeatedly advised by Government, the economic fundamentals are not yet appropriate or ideal for the transition from the use of the multiple currency in the form of bond notes,” said Minister Chinamasa.

He said Government was making efforts to ensure that economic fundamentals are met in the medium term.

“The Government is quite aware that the most economic fundamentals that the country would need to achieve before de-dollarisation begins are foreign exchange reserves sufficient to cover at least three months of imports, sustainable economic growth path and reducing fiscal deficit to sustainable levels.

“Government is placing a lot of emphasis on these economic fundamentals including enhancing consumer and business confidence under the New Economic Order to ensure that the needed economic fundamentals are met in the medium term,” said Minister Chinamasa.

This week, the Sunday Mail reported that Finance and Economic Planning Deputy Minister Terrence Mukupe had said there was a need to take steps towards introducing a local currency once “fundamentals are in place”.

He said the official position was that the country has bond notes but the situation was not tenable.

The Deputy Minister said it was important for the country to have sufficient resources and increase exports before the country could introduce its own currency.

The Reserve Bank of Zimbabwe (RBZ) introduced the notes on November 28 in 2016 as an export incentive meant to boost foreign currency generation.

Egypt based Afreximbank has a $200 million facility backing bond notes in circulation, while bond coins are backed by a $50 million facility, again from Afreximbank.

Last year RBZ Governor Dr John Mangudya announced that Afreximbank would extend another $300 million facility to back bond notes of the same value. — @pamelashumba1.