Zim’s central bank governor vows not to overprint the bond notes
RESERVE Bank of Zimbabwe Governor, John Mangudya, on Friday said he would never do anything that would hurt the country, vowing that the central bank would not overprint the bond notes.
Mangudya made the remarks in Harare at a ceremony to mark the official closure of the 2016 tobacco marketing season hosted by the Tobacco Industry and Marketing Board. He said the central bank was only trying to manage the economy under very difficult circumstances, saying they never intended to let the people of Zimbabwe down.
The central bank governor said government had learnt from its past mistakes and now knew what to do and what not to do, adding that he personally put the country first. “I believe in servant leadership. I am there to serve Zimbabwe not to be served by Zimbabwe. So whatever I do as a policy measure, is just because we think Zimbabwe requires such things.
“And the issue about over-printing does not arise because there are two safety measures,” he said. “The first one is that if there are no exports there are no bond notes, that is why we did it that way. Five percent of hundred-dollars is five dollars. If there is no hundred dollars there is no five dollars; it’s as simple as that.”
Mangudya said the people should not judge them by their past mistakes, saying the bond notes will never cause inflation as the $200 million (R2.86 billion) to be put into circulation was too little.
“What causes inflation are high value notes. More so what causes inflation is the quantity of money in circulation. This economy doesn’t have too much money. We can say this economy has far less than $10bn and that $200m won’t cause inflation,” he said.
Complained
He said they had also responded to the concerns raised by citizens and printed the notes in smaller denominations. “And when people complained, when they were sceptical about them, we made a change that they will only be in twos and fives; these are small denominations and small denominations throughout the whole world do not cause inflation because they are too small to cause inflation.”
Mangudya said the central bank had proved through the bond coins, which have been in circulation for three years now, that it did not have a penchant for printing money just for the sake of it. It was a pro-poor facility meant to provide change as people were being given sweets and other small things they did not need as change.
“We put in place a facility of $50m, to protect those coins, up to now we have only done $15m. We don’t have an appetite of just printing them because the money is there, no. In the whole economy of Zimbabwe we have got only $15m coins,” he said.
Mangudya said the bond notes would not be printed in any quantity more than the $200m facility that backed them. “That is why we said no, let’s have another facility to protect the integrity of the bond notes.” – ANA