Mugabe decrees the use of bond notes

ZIMBABWEAN President Robert Mugabe has side-stepped parliament to issue a decree clearing the way for the introduction of “bond notes” that have raised fears of a return to a domestic currency abandoned in 2009 as hyperinflation crippled the economy.

The bond notes are meant to ease biting cash shortages that have gripped the nation since March but have helped fuel anti-government protests in recent months.

Mugabe this week used his presidential powers to amend the Reserve Bank of Zimbabwe (RBZ) Act, designating bond notes as legal tender that would be equivalent to the US dollar, according to an official government notice.

Financial crisis

Mugabe said bond notes, which he called surrogate currency, “shall be legal tender in all transactions in Zimbabwe” like the US dollar, the pound sterling and the rand, which were also used in the country.Z imbabwe was this year hit by a devastating drought that left 4million people in need of food aid. It was facing its worst financial crisis since switching its currency for the US dollar as weak mineral commodity prices hurt its major exports.

Mugabe’s decree did not say when bond notes would be introduced. The regulations will last six months, after which parliament has to ratify or reject them.

But former finance minister and opposition leader Tendai Biti said Mugabe’s decree was illegal and could be challenged in court. He criticised Mugabe for resorting to a decree when parliament, dominated by the ruling Zanu-PF party, could have easily passed the law.

“Even if assuming they (the regulations) were legal, the presidential powers should only be used in extreme circumstances where there is no sufficient time to go to parliament in the interest of public safety and… good,” Biti said.