Zim cash crisis worsens by day

HARARE - The government’s imminent introduction of bond notes appears to be worsening the country’s cash crisis and triggering panic withdrawals from banks, with jittery Zimbabweans swamping financial institutions in their desperate bid to take out all their money ahead of the launch of the distrusted surrogate currency.

The Daily News established yesterday that the heightened demand for cash had forced stretched banks to reduce their withdrawal limits further — in some cases to as low as $20 per day — and in turn feeding into the growing fears that Zimbabwe has now completely run out of money.

This also comes as small US dollar denominations, including dirty and tattered notes, have disappeared from FROM P1the market — amid speculation that the government is mopping up the scarce greenback ahead of the introduction of the bond notes at the end of the month.

A banking source who spoke to the Daily News last night said the cash situation across the country had become “desperate”.

“We are down to our bare bones. There is no money, which is why we have had to reduce withdrawals further to as little as $20, to try and serve as many people as we can,” the source said.

The situation has left many depositors and businesses frustrated.

“We are not sure whether our money is still safe in the bank. We also hear that once the bond notes are introduced all that is in our accounts will be changed to bond notes,” said Taurai Mupindu who had been queuing for hours in Harare to withdraw his money from a local bank.

“This is why we all want to make sure that we withdraw our money before the new currency comes. I have been coming to the bank every day for the past week, and have only managed to get $120, having failed to get anything on Saturday because there was no money,” he added.

Presenting his monetary policy statement (MPS) two weeks ago, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya confirmed that the country would start using the bond notes this month — in a move that sent shivers down the spines of ordinary citizens who fear the return of the much-despised Zimbabwe dollar and the attendant hyper-inflation that was witnessed a decade ago.

This was despite the fact that the RBZ had in August appeared to indicate that it was having second thoughts about bringing the bond notes into circulation soon, while responding to a lawsuit filed by former vice president Joice Mujuru — saying then that the surrogate currency was still at “a planning stage”.

“It is important to note that bond notes shall not be forced on people who do not like them. The bank is addressing the concerns by planning to introduce smaller denominations of bond notes of $2 and $5.

“In addition, the bank has proposed for the setting up of an independent board to have an oversight role on the issuance of bond notes in the economy. It is critical to emphasise that the introduction of bond notes does not mark the return of the Zimbabwe dollar through the back door.

“The macroeconomic fundamentals or conditions for the return of the local currency are not yet right to do so. The issuance of bond notes has a self-control mechanism in that when there are no exports there will be no bond notes.

“At the rate at which the country is exporting and based on statistics…, we anticipate that bond notes equivalent to around $75 million will be in the market by end of December 2016,” Mangudya said during the presentation of his MPS.

Former Finance minister Tendai Biti told the Daily News yesterday that Zimbabwe was now in “a huge crisis”, adding that the further slashing of withdrawal limits was a tell-tale sign.

“The cash crisis is deepening, meaning that the banks’ margin of operation in respect of physical disbursement of cash has become limited and in some cases non-existent. Compounding the situation is the fact that the public is afraid of the bond notes and hence everyone who has a salary in the bank is rushing to get it out before the invasion of the bond notes.

“So we are in the middle of a banking storm because of the total collapse of the system emanating from a lack of trust by the public. The crisis will only get worse and the introduction of bond notes was always going to be suicidal on the part of government. It is the endgame,” the former treasury chief said.

Veteran economist John Robertson said people were panicking because there was an earlier belief that bond notes would start circulating at the beginning of the month.

“It goes without saying that the crisis has only deepened. The way I see it the bond notes will do nothing to mitigate the cash crisis. Given the strong distrust depositors have, it is obvious people are scared the notes are a reincarnation of the Zimbabwe dollar,” he said.

The MDC said the panicking public had a right to safeguard its money and the high withdrawal demands were consistent with that desire.

“It’s pretty clear and obvious that there has been a run on deposits at all banks since the Zanu PF regime announced that bond notes were going to be introduced into the financial system.

“Most people would rather keep their money away from banks rather than risk losing it when bond notes hit the market. After all, once beaten twice shy. Bond notes have no buy-in from the majority of the people,” spokesperson Obert Gutu said.

In the meantime, the government’s quest to introduce the much-distrusted bond notes onto the market later this month continues to face challenges.

After seeing her urgent application challenging the introduction of bond notes at the Constitutional Court (Con-Court) thrown out on a technicality, Mujuru has since escalated her objections to the surrogate currency by asking the RBZ to reveal the law it will use to back their introduction.

Harare businessman and well known industrialist, Frederick Mutanda has also filed a High Court suit challenging the procedure and legality of the bond notes.

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.

President Robert Mugabe is battling to save his long political career as citizen unrest escalates over the ever-deteriorating quality of life locally, which they blame squarely on his misrule.

Comments (18)

One of these days there will be breaking news that Zimbabwe has run out of the US$ which people had become accustomed to. God save Zimbabwe from this mafia masquerading as a government.

pride - 5 October 2016

Mangudya must nust bring in a $20 at the same time.expand on the gurruntee to 120m n bring in 20.These 2 notes $2 n $5 will only save vendors.Biti can yu also give alternatives.critic ,critic no solution.?

viola gwena - 5 October 2016

biti has given solution. this gvt must stop being corrupt. stsop rigging, stop being selfish. go to their homes they have large suitcases with lots and lots of cash. ivava tete viola vamunoda kuti vapihwe alternatives. i heard some lady kuti shes buying from bankers as much as 2000 for 2800. waiting for the bonds to come so she can make money. and obviously those powerful pple are anticipating to make more. this problem is man made by selfsh selfish pple

kelly - 5 October 2016

@kelly. Kkkk. Lol. Biti needs to give economic alternatives. He is too much of a critic.

viola gwena - 5 October 2016

is there a cash crisis?what cash crisis?if there is a crisis in zim its that of low production as a result of MDC instigated sanctions

truth - 5 October 2016

guys sanctions wr not brought about by mdc, listen even to zbc news when they talk of how sanctioned wr imposed on zim, they wr brought in by the violent takeover of land and the slective distribution system period, truth, dont hate the mdc to the extent of misleading people, i dont support mdc but thats the reality on the ground

laughter - 5 October 2016

Any sane person would hide all valuables when a rogue regime is about to commit the second cash Heist within one decade.

X-MAN IV - 5 October 2016

the govt must disburse the bond notes now,any delay will only aid the speculators,the public want to transact and must not be inconvinienced

truth - 5 October 2016

I agree with thruth zim must bring the bond notes as it will be cheaper for all of us to go home as zimbabweans at home have no concept of the value of US dollar. they treating the us$ as they treated the Zim$ back in the days. so lets have the bond notes

post - 5 October 2016

People should understand that this government has allegedly spend money belonging to companies already and wants bond notes to try and cover the gap. Dont listen to the lies that you will be able to retrieve bond notes when you need US$, where will you get the US$ when banks dont have them now. Those that are not careful will sell their wares in bond notes and thats their grave to poverty. This govt is heartless, cruel and does not care an inch about citizens concerns. Guys make your decision, i have already put all my money in the pillow. They want to pay civil servants salaries with bond notes and the bonus in bond notes and all those goods being purchased in bond notes will never come back to the shelve. Do you expect an ordinary Zimbo getting an alloacation of forex from the Reserve Bank, FORGET IT. Only the Mpokos will get money to fill their supermarkets while the rest toil. The President said it himself that the US$ is being externalised so we have to introduce our own currency and lock all the US$ at the Reserve Bank. They want to take all the US $ for govt use, and buy more days in power. but the plan is going to collapse dismally because the people are not in support. This is my prayer "Father God we pray as citizens of this country that you disrupt all the plans by this evil govt of Zimbabwe to steal and impoverish its citizens. Let there be darkness in their minds and let there be no future in their plans in the MIGHTY NAME OF JESUS CHRIST,AMEN.

Mhandu - 6 October 2016

Mangudya must be his own man.It looks like his procrastination is coming from his financiers Exim bank.Too tight controls.He culd have brot in these notes by himself ,without Exim bank.What is of paramount importance is to adhere to economic management principles.If he runs Reserve bank wthout political interference he can steer the cash crisis to stability.Bt his fear of upseting politicians is making him seek cover wth Exim bank.

viola gwena - 6 October 2016

chabvondoka

NUTTY DREADLOCK - 6 October 2016

you are right mhandu, zvino madununu akawanda muZimbabwe, rimwe riri kutoti dai mabond awuya ndaita mari.

HATIDI MA BOND PAPER - 6 October 2016

the only solution is Mugabe must resign , all this will end,,, we can try all tricks but as long the old man is still sitting there nothing will progress,,,

mafidibo - 6 October 2016

Ya lizakaka mashona lebond paper yenu, wena Truth msunu webhare shlama

Ndoda - 6 October 2016

Again with sanctions... iwe why are people standing in lines at the banks. we're running out of money. Thats called a cash crisis, isn't it?

Young Zimbo - 6 October 2016

Viola uri bharanzi remunhu. wakamboona mari inonzi bond note kupi. ko kana usina zvokutaura kunyrara unofa here. kusaziva kufa. asi ndopaunoraramirawo uchipiwa mari yokutaura seusina brain here sorry hako zvichapera hazvo. muchazotarisa moti deno takaziva. Mwari acharanga chero vana nemhosva dzevabereki vavo. solutions and advice does not work to zanu pf. havatereri chiroba

Truth - 10 October 2016

Thats why Baba Tensen said 'kudzokera kuzimba kuhumana".Once beaten twice shy

EMMANUEL - 14 December 2016

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