Mangudya clears air on bond notes

HARARE - The Reserve Bank of Zimbabwe (RBZ) has pleaded with depositors to stop panic withdrawals from banks as this will only worsen the economic situation in the country.

Hard-pressed central governor John Mangudya on Monday told Parliament that the introduction of bond notes is aimed at supporting exporters and does not signal the end of the multiple currency system.

“Bond coins dealt with the change problem. The purpose of bond notes is to deal with an incentive for exporters but people are now confusing that the bond notes are here to cater for cash shortages, No. That is not the case,” he said.

This was after the RBZ’s recent measures, including limiting withdrawals to $1 000 per day and introducing a series of tokens, known as bond notes and rated at par with the US dollar to ease the current cash crisis have been met with resistance amid concerns in some sectors that government is now planning to bring back the dreaded Zim-dollar.

Since last week, depositors have been rushing to withdraw their hard-earned monies from financial institutions — sparking fears of bank run-ins — while farmers also rioted demanding to get their tobacco earnings in cash excess of the limited $1 000 daily withdrawals.

Mangudya, who capitulated under pressure and allowed farmers to receive up to $10 000 per day, conceded that the recent policy pronouncements were misunderstood by the public.

“I sympathise with the people of Zimbabwe who have taken our policy pronouncements to address the US dollar cash shortages to anticipate that we are going to have a repeat of the economic tragedy of 2008. What we are trying to do is to ensure that the economy is stabilised and stimulated for the betterment of all Zimbabweans. So the people of Zimbabwe should know that it is not correct to compare bond notes with bearer cheques from the Zim dollar era,” he added.

Zimbabwe adopted the United States dollar and South African currencies in 2009 after hyperinflation peaked at 231 million percent, rendering the national currency worthless.

However, the recent appreciation of the greenback coupled with declining manufacturing production and widening trade deficit has left the country experiencing a biting liquidity crunch.

“We said instead of giving exporters real cash in an economy where there is externalisation, cash flight and hoarding of cash we knew people would hoard from this facility so we decided to use a bit of some leverage by then providing bond notes against this facility,” Mangudya said.

The Apex bank chief said Zimbabweans must have a positive attitude towards the economy and embrace the notes, which are nothing more that “just an export incentive scheme”.

Comments (18)

People panic and take their money from banks because the government lacks clear a monetary policy that is consistent with the economic outlook. The policies are not articulated well, and proposals come out of nowhere and seem rushed and done in panic. All of these in addition to reports of significant externalization, corruption and the disappearence of huge amounts diamond money makes it impossible for the people to believe that bond notes are just that and nothing else. There is history to look at and if people do not look at the 2008 history then they will have no one but themselves to blame. Many people lost money over night during that crisis. Now here we are again, on the brink...

gudo - 11 May 2016

People have no trust in the administration led by Robert Mugabe, we have seen this over and over. Ma bond iwawo ndeako nana Robert kwete isu, hatidi maBond ako.

Masvinhu - 11 May 2016

"mangudya failed to clear the air on bond notes" IS PROPER HEADLINE

nehanda nyakasikana - 11 May 2016

Bond Ntes, a new name for the failed Bearer Cheques. Trying to teach history a lesson. Haaaaahahahahah

Bearer Cheque - 11 May 2016

They should have encourage people to use check books and of sale

Benard Dube - 11 May 2016

i watched this boy trying to justify these mummified bearer checks coming back to (after) life! i think gideon was a beta lier; gideon culd succeed in fallacy but this mangudya boy is a disaster. what export incentive is he talking about when the industry(both primary & sec) is producing nothing? diamonds are being smuggled to the extent of leaking $15b and panonetsa talks about exportz; what exportz?? the other time it started with travellers checks for cross boarders when all of them were boarder jumpers! the next episode where agro-checks when the farmers were not doing anything; infact they were busy selling fuel coupons meant for farming. afterwards it became 0risation after 0rization & printing afta printing & the rest was undue hardships for the average man. there in no air for panonetsa to clear because the worst pollutant that need immediate incineration is rhobhati & company. send rhobhati to the dumpsite and then clear the air! fakofu!

SaManyika Chaiye - 11 May 2016

If the bond notes are supposed to be given to exporters, why are the denominations so small?? Who exports $20 worth of product? Taneta..we will have two years of hell

Davie - 11 May 2016

Can someone out there , help me , by defining the meaning of externalization ,and also tell me what distinguishes ,leakages and externalization.

muZJC - 11 May 2016

do not deposit or withdraw from atm u would get bond note s do not trust these devils

nowa - 11 May 2016

the definotion(s) & distinction of leakages from externalisation are broad to be illustrated in the totality of their meaning on this rather social platform, but in short; a leakage refer to diversion of funds using systematic methods in a manner that reduce funds that are available in an economy(J. M. Keynes) common leakages involve foreign firms that repatriate funds to parent kantries instead of investing in hosts; non productive economies that rely on imports(thus sending money out and get goods) or too much saving(kugara nemari kumba), on the other hand externalisation refer to capital flight in the form of transfer pricing, undrpricing of exports, blatant smuggling of precious gems and banking misdemeanors like manipulating forex regulations(R. Marima). the distincition is that externalisation(s) in all its types are forms of leakages. unogona kungoreseacher-wo wega!

SaManyika Chaiye - 11 May 2016

Bond note:- a document that allows goods to be taken from a bonded warehouse [ a place where goods are kept before tax is paid on them] and imported or exported. This is just wrong, for RBZ to issue anything and call it legal tender and confine it to local use only, worse still put that thing value at par with currencies used outside the country. The powers that be need to address , the route cause of our financial problems, and then our own ZWD will work like magic. Our problems are well documented and are known. there is just no will from this zanu pf government.

X-MAN IV - 11 May 2016

2008 they stole our hard earned cash and we worked hard from zero to acquire the hard currency which they now want to steal from us again

look - 12 May 2016

different name same shit kkkkk he failed to clear air should be the proper heading

Warvet - 12 May 2016

Haiwa Chihwa mambozama professionalism in tough environment where minister contradict publicly on critical policies that are used by investors when making decisions, where disintergration is more pronounced rather than intergration, where one man is the policy and whatever is said depends on what the weather is like, where we stick to currency externalisers as investors ignoring the national interests in the pretext of friendship, where we expect the governor like you to perform miracles when we mess up, where we put resources on bashes and matches yet children and women are suffering due to shortage of drugs in hospitals, where men are always at war and their death is always considered to have occurred at the battle front. Aiwa Chihwa madiniwo printaiwo mabond paper iwaya muvapewo vanzwe kutapira kwazvo so that there wont be anything to externalise, so that there wont be anything to use to fly out of the country, so that we stay home and realise how people are suffering.

Rex - 12 May 2016

please do not indignatys but externalise.

JACK - 12 May 2016

What panic withdrawals? This morning I went to the bank with the intention of withdrawing just $20 for my daughter's bus fare and for my haircut. 'Panic withdrawal' is a stupid term when considered against the fact that I need this small amount of money to cater for a very basic need. Needless to say, there was no money at the bank. Now this Mangudya fellow tells us to use plastic money? How to I pay for my hair cut and for the kombi fare with my ATM card? These guys have an easy life, and they look down upon the rest of us and never bat an eye if we go without our basic necessities, whilst they deny us access to our meagre savings.

machakachaka - 12 May 2016

It's clear the govt wants to steal people's hard earned money and possibly use these so called bond notes to pay the civil servants. What kind of economics is this really, so from nowhere you have bond notes and rate them at par with a strong US$ using borrowed money as backup to the notes? Hahahahaha this is complete nonsense....this govt is bankrupt of both money and ideas, how are they going to pay back that US$200m it's not clear because everyone knows the gvt is deathly broke. Mangudya is gonna be worse than Gono because you can tell he just rushes to make decisions without anticipating the consequences. Apa bob katori ku Uganda zvako kachingopembereka nenyika dzese kunge munhu asina kukwana. I hope all people who have their monies in the banks withdraw all of it otherwise this is gonna be like 2008. It takes a revolution to make a solution. Zanu PF out, you have failed completely!!

misty - 13 May 2016

ok these guys are just trying to make our lives a live ahell again just luke 2008 in the name of easing economic cash crises. .. manje this time we are very vigilante

solace - 15 May 2016

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