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IMF contradicts govt on bond notes

By Tatenda Dewa | Harare Bureau |

The International Monetary Fund (IMF) has indicated that it has not yet accepted the introduction of bond notes, contrary to earlier official reports that it supported the move.

Finance and Economic Development Minister Patrick Chinamasa (left) addresses guests while IMF Head of Mission Mr Domenico Fanizza and Reserve Bank of Zimbabwe Governor Dr John Mangudya (right) look on during the wrap-up meeting and dialogue at the conclusion of the first review of the IMF Staff Monitored Programme (Picture by Innocent Makawa)
Finance and Economic Development Minister Patrick Chinamasa (left) addresses guests while IMF Head of Mission Mr Domenico Fanizza and Reserve Bank of Zimbabwe Governor Dr John Mangudya (right) look on during the wrap-up meeting and dialogue at the conclusion of the first review of the IMF Staff Monitored Programme (Picture by Innocent Makawa)

State media recently claimed that the IMF, which is currently taking the government through a Staff Monitored Programme (SMP) to improve Zimbabwe’s financial standing, had given the bond notes the nod.

“The IMF…supported introduction of bond notes and was satisfied that Zimbabwe’s authorities would deal with all monetary issues transparently,” wrote the government controlled Sunday Mail.

It did not name the government official who made the statement but quoted the finance minister, Patrick Chinamasa, Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya and his deputy, K upukile Mlambo in the story.

Mlambo told the weekly: “We are going to be transparent. Remember, we are also under a Staff Monitored Programme of the IMF. So, they, too, also monitor these things to check if they are all transparent. Everything is above board.”

However, IMF deputy spokesperson for the communications department, William Murray, last week issued a media statement that almost put scorn on the claim that it had accepted the introduction of the bond notes.

Murray said the Bretton Woods institution which is owed millions of dollars by the Zimbabwean government and suspended financial support to Harare more than a decade ago was still watching developments in the country.

“We are currently assessing the implications of the measures on the economy, including the more recently announced issuance of bond notes; and we’ll engage in further discussions with the authorities with regard to their strategies,” said William in his statement..

“So, we’re going to have more discussions with the Zimbabweans on this strategy,” he added.

Williams said the cash shortages that Zimbabwe has been grappling with since April were “mainly the result of weak external inflows and a decline in prices of commodity exports” that had been worsened by an El Nino-induced drought that has left close to three million people in need of food aid.

Government announced that it would be introducing the bond notes to ease cash shortages through the promotion of exports.

However, industry and commerce as well as consumers have greeted the news with trepidation, fearing that it was meant to re-introduce the local currency that was discarded in 2009 following hyperinflation.

Government is seen to be too anxious to have Zimbabweans accept the bond notes in the wake of the widespread resistance the move met.

The introduction of the notes has been moved to August, but even that date remains tentative.

Initially, government was reported to have planned to start using the notes in June.

The prevailing cash crunch has crippled manufacturing and services as basic commodities start to disappear from the shops in a trend reminiscent of the pre-2009 era when the economy went on a freefall.

Mangudya has, however, reiterated that government will not bring back the Zimbabwean dollar, preferring to continue with a basket of foreign currencies now dominated by the greenback. Nehanda Radio

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