Govt to inject more bond notes

HARARE - Zimbabwe plans to inject more "bond notes" amid a worsening cash crisis.

Finance minister Patrick Chinamasa said government plans to introduce more local bond notes, a token currency that is so far trading at par with the US dollar, to cure a persistent liquidity crunch, even though analysts have warned that it may stoke inflationary fears.

The bond notes were injected through a performance-related export scheme.

“What I have said is that the Central Bank is aware and is seized with the matter that the money circulation is tight and they are going to increase in line with the country’s needs. If we put $100m right now, it will disturb the economy,” Chinamasa told the National Assembly on Tuesday.

“...They found it prudent that the bond notes be released gradually and increase when the demand is higher like this festive season.

“Those who are withdrawing their money are the ones that have money in the banks. There is no one who is going to the queues who is not getting their money. All the people are getting the allocations that they are supposed to get.”

The apex bank’s governor, John Mangudya, injected $12 million into the system during the week-ending December 16 — bringing the total amount of bond notes in circulation to $29 million.

The notes are backed by a $200 million Afreximbank facility and are valued at par with the United States dollar.

Chinamasa said the central bank is ceased with the issue of lengthening bank queues and doing their best to work things out. 

“I want this House to know that at the moment, bond notes are an incentive to those who are selling outside the country. These include tobacco growers and gold miners. 

“Right now, the Reserve Bank has released $29,6 million into the market and they are doing their best to see that the challenges we are facing are lessened. The issue of bond notes is not an overnight thing.  The Reserve Bank will work flat out so that they work things out.”