Bond notes to be gradually removed from circulation

05 Nov, 2019 - 14:11 0 Views
Bond notes to be gradually removed from circulation

eBusiness Weekly

HARARE – Bond notes and coins will  continue being used as legal tender in Zimbabwe for a limited period  alongside new notes and coins which will be put into circulation this  month, a senior government official has said.

Last week, the Reserve Bank of Zimbabwe (RBZ) announced the  introduction of new bank notes by mid-November as it moves to end long  running cash shortages in the economy.

Zimbabwe has endured biting cash shortages for years now, leading to  the birth of a thriving parallel market where cash is sold at premiums  as high as 50 percent in exchange for electronic money.

In addition, the cash shortages have also led to the creation of a  multi-tier pricing system in the economy, depending on the mode of  payment, pushing up the cost of goods and services, and ultimately  inflation in the country.

The shortages became more pronounced early this year when the  government scrapped the use of the multi-currency system which had been  in place for 10 years in favour of the Zimbabwe dollar which is now the  sole legal tender but did not immediately introduce new replacement  local notes, opting instead to retain use of the bond notes and coins  which had been introduced as a surrogate to the USD for local  transaction purposes.

Finance and Economic Development permanent secretary George Guvamatanga  dismissed assertions that bond notes would be immediately decommissioned  once the new notes were introduced.

“The bond notes will still work though, so I am not saying come rush  and change the bond note (for the new notes). Initially the bond notes  will work alongside the new notes and coins and they will have the same  value,” he said.

“At some point we will cut off, if you continue holding them we will  not tell you when we will cut off, but at some point we will cut off and  only remain with the new notes and coins.”

Guvamatanga said the main motivation behind the introduction of the new  notes was to alleviate the current cash shortages.

“The new currency when we introduced it (in June this year), was not  supported by its own notes and coins and we adopted the bond notes and  coins as a form of the physical cash to support the new currency. We are  now saying the time is now right for us to bring in new notes and coins  which support the currency which is already there,” he said.

The new $2 and $5 Zimbabwe dollar bank notes amounting up to ZWL$1  billion will be gradually injected into the market to avoid fueling  inflation.

The new notes will be green and purple in color respectively while some  of their features include the RBZ logo and three balancing rocks on the  front.

The $2ZWL note will have the Parliament of Zimbabwe building and the  eternal flame as main features on the back side while the $5ZWL dollar  will have an impression of three giraffes and three palm trees on the  back side.

Guvamatanga said the introduction of the new notes was part of bold  reforms that the government was pursuing.

The reforms, he said, would yield positive results in the long-run.

“For anyone to believe that let us go on our own (with the reforms)  without financial support from anyone, that actually requires boldness  and true reformists. For you to make that call you need people who are  dedicated to reforms, who are dedicated to making this country right.

“(To say) we will look at our fuel, it is not the right price, we know  it will hurt our people but this is the right thing to do. You look at  energy, we know it will hurt our people because incomes have not moved  in line with the changes but it is the right thing to do if we are going  to create the right platform, the right environment for this economy to  grow and for our people to have prosperity in the future. We have to  take this bitter medicine,” he said.

The government has removed subsidies on fuel allowing market forces to  determine its retail price, resulting in fuel price hikes almost every  week.

The government has also granted power utility ZESA a 300 percent tariff  hike. – New Ziana

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