Zim issues bond notes in cash crisis

ZIMBABWE’S central bank has printed half of the ‘bond notes’ quasi-currency it intends to issue under a $200-million (R2.54billion) scheme as the country grapples with a biting shortage of US dollars.

The notes are intended to be pegged to the US currency but fears have been raised that the Reserve Bank of Zimbabwe (RBZ) would print more than planned, undermining their value.

Long bank queues have persisted since the bank introduced bond notes last November, with the moribund economy desperately short of US dollars.

RBZ governor John Mangudya told the Herald newspaper that the central bank had so far issued $102-million (R1.29-billion) in bond notes, which he said was trading at par with the dollar.

Mangudya did not answer his phone when contacted for further comment.

But in Harare on Friday, street traders were selling R100 for $8.50 (R108) when buying with bond notes and $8 (R101) when using US dollars, suggesting they are not on par.

Some businesses are offering discounts of up to 30% on dollar sales, while importers struggle to trade bond notes in exchange for dollars as the cash crunch bites.

“It is lack of discipline and confidence that cause traders to have multi-tier pricing system on some products, especially products such as cooking oil,” Mangudya said.

The central bank can only print $200-million in bond notes, which are backed by a bond to the value of the same amount from the African Import and Export Bank.

US dollars, which replaced the Zimbabwe dollar in 2009 as hyperinflation rendered the currency worthless, are slowly disappearing in the economy while the bond notes have failed to ease cash shortages.

Mangudya said the amount of bond notes, which are in $2 (R25.44) and $5 (R63.61) denominations, as well as coins, was 1.8% of the total bank deposits of more than $6-billion (R76.3billion). — Reuters