Bond notes not done deal: Govt

HARARE - The government has suggested that it may still be a while before it introduces the much-distrusted bond notes on the market — which are meant to mitigate Zimbabwe’s severe cash shortages — with the Reserve Bank of Zimbabwe (RBZ) revealing in court on Friday that the notes are only at a “planning stage”.

In its opposing papers to legal action against the bond notes that has been filed at the Constitutional Court by former vice president and now Zimbabwe People First (ZPF) leader, Joice Mujuru, the central bank said it also still needed to meet statutory requirements to back the use of the notes, whose introduction is targeted for October this year. In her application seeking the declaration of the introduction of the bond notes as unconstitutional — which was filed through FROM P1

Hamunakwadi and Nyandoro Law Chambers — Mujuru cited President Robert Mugabe, Finance minister Patrick Chinamasa, the RBZ and its governor John Mangudya, and attorney general Prince Machaya as respondents.

But responding to the lawsuit, Mangudya described Mujuru’s court application as both “premature and ill-founded”, adding, “Indeed bond notes, outside of a policy announced by Fourth respondent (RBZ), are still at planning stage ...”.

“At no point has the (Reserve Bank) stated that bond notes are bank notes or indeed currency as defined in our laws, in particular the (Reserve) Act and the Bank Use Promotion Act (chapter 24:24).

“The entirety of applicant’s (Mujuru) action is premised on bond notes constituting bank notes and, or currency when in fact there is absolutely no basis for reaching this conclusion,” Mangudya added.

However, Mujuru still argued that bond notes were not provided for under the RBZ Act, adding that despite them being said to have the same value as the United States dollar, they were bound to depreciate in value.

“Further, a bond note cannot be the equivalent of any of the foreign currencies it will operate side-by-side with. Accordingly, the mandatory exchange of any foreign currency with a bond note is a prima facie deprivation of property rights.

“Money is property and a bond note, not being money, can never substitute money. There is therefore an infringement of the right protected by Section 71(2) of the Constitution to the extent that holders of foreign currency will be forced to use or hold bond notes in the place of their money,” she said.

“Whatever the respondents may seek to say about the bond note, it is clearly a disguised Zimbabwean dollar that is being introduced through the back door. The law does not allow a back door approach. If they wish to re-introduce the Zimbabwean dollar they must follow the law and call it by name given its demonetisation.

“Just like the bearer cheques of the period before 2009, bond notes will not be worth the paper on which they will be printed, but will make the poor poorer as they will be made to lose the little valuable assets they have, such as livestock, to the privileged few who will be in possession of worthless bond notes,” the ZPF leader added.

But Mangudya said the central bank could not “at this stage be compelled to state the form and nature of these bond notes without having complied with necessary statutory and related regulatory compliances”.

“Indeed, to dispute these averments is to concede that the application is not only premature, but also that there does exist material dispute of fact regarding the form and nature of the bond notes.

“In short, and put in another way, legal arguments cannot be formulated on the basis of unknown facts, as applicant (Mujuru) attempts to do by bringing this patently premature application,” he said.

“It is impossible at this stage for the applicant to complain of an imagined infringement of her constitutional rights when the nature and form of that infringement ... is yet to be ascertained,” the RBZ chief added.

However, central bank deputy governor Kupukile Mlambo told the Daily News last month that the RBZ had covered a lot of ground in preparation for the introduction of the bond notes.

“All I can say is yes, October is still the introduction date. The process is not just printing, it also involves design. So, we are well on track,” Mlambo said then.

The announcement of the imminent introduction of the bond notes has caused panic among Zimbabweans as it revived ugly memories of the 2007 and 2008 economic era which was marked by severe food shortages and hyperinflation.

Zimbabwe has for the past few months been reeling from severe cash shortages that analysts blame on gross mismanagement by the Zanu PF government and the country’s dying economy.

Last Wednesday, heavily armed riot police descended on hapless protesters who had gathered in Harare to protest over the deepening economic crisis, including the planned introduction of the bond notes. The brutal crackdown against the vendors and pro-democracy activists — who included radical pressure group Tajamuka/Sesjikile — followed a similar brutal police action against thousands of unemployed graduates who marched in the capital last month.

This triggered an outpouring of anger from many Zimbabweans who were shocked by police’s heavy-handedness, and which was described as a serious violation of the country’s Constitution which guarantees the right to demonstrate.

Comments (15)

anozowa paplanning stage say iwo akanzi by october gore rino nhai va mangudya. hinindawa kunyeba kudaro. zidofo rinokanganwa zvarinenge rataura

manyepo - 23 August 2016

after 2018 erections we wont need sh!t bond notes!

bond james - 23 August 2016

interesting reading. true to his word, the bond note may not be introduced. an article has already highlighted how Zimbabwe has printing money. If they were doing so unconsciously then they now know how.

gwabu - 24 August 2016

bond notes can illegal,but why not give these economists a chance,may be they can extricate us from the messy we are in,caused by capital flight in the hands of economic saboteurs.

kgb - 24 August 2016

bond notes can illegal,but why not give these economists a chance,may be they can extricate us from the messy we are in,caused by capital flight in the hands of economic saboteurs.

kgb - 24 August 2016

The bases of the application is to highlight to Mangudya that he must not wast effort to try to have an illegal plan. The is no value on the bond note. Its can not be exchanged with a rand or any other real currency since that will be theft according to Mangudya the bond note is not a currency. So why would it have a value of a currency?

amina - 24 August 2016

Economic saboteurs are the big guns in Zanu PF and their hangers on including the Chinese. So to get rid of economic sabotage, simply effect regime change. And regime change is an integral part of politics. You cannot have politics without regime change agendas.

Clear - 24 August 2016

These people are playing with us.they saw that people refused there bond shit that's why they are now saying its not yet to be introduced.They are going to burn all their bond shit.They thought we are fools.All along they were saying the bond shit were ready now they are changing. nonsense!!!!!

Matsotsi - 24 August 2016

A protest will not alter economic challenges. An economic problem requires economic laws and innovative theories to alleviate the challenge. Apart from protesting, what economic challenge alleviating proposition do these protesters really have? Enlighten me please.

EconomicSense - 24 August 2016

ummm mangudya wapererwa.chingotaura kuti zvarambwa nevanhu. porisi yazvivharisa zvekutamba izvo

mhondoro - 24 August 2016

@Economicsense...My brother it is the duty of the ZANU PF government to provide real, acceptable, effective economic solutions. All we are saying that bond notes valued at nothing (or zero) can never be equivalent to the US dollar. We are saying Cde Governor and your team please go back to the drawing board.

Viva Unidade - 24 August 2016

Zanu(PF) Yawondomora nyika ,imbavha dzega dzega dzisina brain.Ndinoshamisika kunyange ne masupporter acho vanoramba vachirumbidza vanhu vari kuti urayira nyika takatarisa. Apa tarisaiwo muone munoti vanhu chaivo vano introducer hanzi mari isina maturo kune dzimwe nyika zvine musoro izvozvo.Handei tione kuri kuenda nyika hanzi fast track land reform,51% ownership in foreign companies ,zimasset ummm zvakaoma nhasi tava papi?

Lord Suppers - 25 August 2016

Economics dzekumaprazi dzauraya a beautiful country. Running a country is different from running a tuckshop.... Fix th economy or th economy will fix u

Dhewa - 25 August 2016

Our Economic problems are a consequence of many rash policies and decisions. It's interesting to note that this Government Blind-Sided the "Opposition" within the GNU with the Economic situation, so as to rig the election. While Tendai Biti and others were earnestly pursuing solutions to our economy Mugabe and co. together with Israeli company Nikuv and its Ron Asher were putting together their scheme.

Nooshie - 28 August 2016

$15 Billion U.S. disappeared under the eyes of the army, working with Ainjin, ZMDC in partnership with Marange Resources, and Mbada, supposedly a local entity. Just a fraction of that amount could have revived industry and added more to the government's coffers. Why use bond notes backed by the same currency that is in short supply. The years of gonomics taught us that Gono was printing worthless paper and exchanging it for hard currency from the so-called parallel market. This was daylight robbery. Unless trust in the Central Bank and the Treasury is re-established, printing money without meaningful production in all sectors of the the economy will render the exercise useless. Don't go looking for non-existent saboteurs, other than those who facilitated the disappearance of $15 billion.

just common sense - 29 August 2016

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.