Jail term for devaluing bond notes

HARARE - Retailers and dealers fuelling the three-tier pricing that has emerged as market forces are overpowering the forced parity of bond notes face imprisonment of up to seven years.

This comes after President Robert Mugabe on Friday signed into law the Reserve Bank of Zimbabwe Amendment Act, 2017 (No. 1 of 2017) that has regularised the circulation of bond notes.

A bond note unit — limited for domestic commerce — has been fixed by the RBZ to trade at par with one US dollar.

But retailers have low confidence in the bond notes and place different price tags on goods dependent on the currency used to pay for the item.

Firms’ prices reflect that one US dollar in hard cash is equivalent to $1,30 in bond notes, meaning that the surrogate currency has already lost 30 percent of its value.

Zimbabwean firms resorting to the black market to get US dollars pay a premium of up to 25 percent.

The Reserve Bank of Zimbabwe (RBZ) last weekend threatened to invoke the new RBZ Act to arrest anyone trading the fiat currency at a rate apart from what they had officially imposed, a situation that clearly undermines market forces influencing the exchange rates of all currencies trading in the economy.

Mugabe, in October last year, invoked the Presidential Powers (Temporary Measures) Act to amend the Reserve Bank of Zimbabwe Act to designate bond notes as legal tender.

Like all regulations made under the Presidential Powers (Temporary Measures) Act, the regulations were only a temporary measure, destined to lapse after 180 days unless earlier repealed or confirmed by Act of Parliament.  

Parliament passed the RBZ Amendment Bill (H.B. 12, 2016) this month, which was gazetted unusually quickly.

Speaker of the National Assembly Jacob Mudenda gave notice in the Government Gazette announcing that the draft bill had been transmitted to the president for his assent and signature on March 7. The changes had since been awaiting presidential approval.

“The following law, which was assented to by the president, is published in terms of Section 131 (6) of the Constitution of Zimbabwe - Reserve Bank of Zimbabwe Amendment Act, 2017 (No. 1 of 2017),” said an extraordinary Government Gazette published last Friday by chief secretary to the President and Cabinet, Misheck Sibanda.

This comes after RBZ deputy governor Kupukile Mlambo told a RBZ and Confederation of Zimbabwe Retailers breakfast meeting held in Harare last weekend that he was aware that some of the retailers have a three-tier pricing system; for bond notes, swiping and US dollar, “that is illegal; the law doesn’t allow it.”

“But you can’t deal with all these things until the Bond Act has been enacted. It has been passed by Parliament; we are just waiting for the president to assent to the Bill. Once it’s operational, we can deal with those issues.

“At the moment, it is difficult to deal with such issues because we don’t have a legal framework. Once the president signs the Bill, we will address that,” he said.

The new Act validates the issuance of bond coins currently in circulation, “for the avoidance of doubt,” and Zimbabweans who may choose to inflict any form of damage on bond notes or trade them at any rate not at par with one US dollar could face imprisonment of up to seven years.

Section 42 of the RBZ Act outlines that those who violate the provisions are liable “to imprisonment for a period not exceeding seven years.”

Any person who “(c) knowing that it is to be used for an unlawful purpose, has in his possession any material whatsoever upon which has been engraved or made any such words, figures, letters, marks, lines or devices as mentioned in paragraph (a); shall be guilty of an offence...”

Economic commentator and University of Zimbabwe professor, Tony Hawkins, said bond notes were inevitably going to lose value against other currencies because productivity remains weak.

This comes after the RBZ started circulating a $5 bond note last month.

The Central Bank first issued a $2 note and $1 coin last November.

Comments (8)

Bond notes or Zimbabwe's very own monopoly money will obviously lose vale when compared to the US dollar. One is funny money and the other is real. You dont have to study at the Univ of Zimbabwe business school to know this ! Even the guy selling tomatoes on the side of the road near Chivhu told me he only takes US dollars

nelson moyo - 28 March 2017

7 years for devaluing the bond paper,kkkkikest.Typical of a country ruled by a dictator.The ailing dictator can actually sign a law that makes one punishable by death for refusing to accept the bond notes.Instead of finding a lasting solutions to our economic problems the zombies at the helm continue looking for ways to sustain the value less paper.Common sense dictates that the bond paper in circulation has already lost value on account the US dollar is fast dissappearing from the market.

Janana wa Bikaz - 28 March 2017

These people never learn, you cant bully or dictate economics. Supply and demand are not rumours or folk tales, Its real

Anthony Galtieri - 28 March 2017

7 years for hedging against losses you know are coming. Vanhu vaMugabe vanopenga zvekupedzesera. Vazonyatsopererwa manje.

selele - 28 March 2017

Common sense is a non-existant commodity in Zimbabwe.Stupid is trying in vain doing something that one knows will not produce any positive results.We can never rewrite the laws of economics to suit our warped thinking at any given time and the sooner we know this, the better.

Ngazvirehwe Sezvazviri - 28 March 2017

Ma bollars

Young Zimbo - 28 March 2017

Can Govt. departments explain why they will not take Bond Notes but expect us to use them ?

Zims - 29 March 2017

even at immigration they are not accepting the bonds , what can be the reason .....simple answer cos they are bonds

katsi - 29 March 2017

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