The planned introduction of bond notes has been moved to early November, with a public campaign on the new currency expected to commence at the end of this month, Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya, has said.
Mangudya had indicated during his mid-term monetary policy statement last month that the bond notes would be unveiled to the market at the end of this month.
However, he said the marketing of the new currency, said to be a surrogate of the dominant United States dollar, would start on October 31 with the release of bond notes expected in early November.
Mangudya, who admitted during an interview with the Financial Gazette that there was public scepticism over the new currency, said bond notes would in fact help maintain the current multi-currency system rather than eliminate it.
The bond notes would be used to incentivise exporters.
Mangudya said bond notes would be used as a funding mechanism for the export incentive in order to preserve the US dollars supporting the scheme, which will be bankrolled to the tune of US$200 million by the African Export and Import Bank.
The bond notes would be zero-coupon, tax-exempt debt instruments.
Exporters would receive the incentive in US dollars and the incentive would be credited to their US dollar accounts in US dollar currency.
An exporter would then transact through real-time gross settlement system (RTGS), make foreign payments for imports of goods and services and transact freely within the multi-currency exchange system.
He said the issuance of bond notes has a self-control mechanism in that when there are no exports, there would be no bond notes.
The bond notes would be released gradually into the economy in sympathy with export receipts through normal banking channels up to a maximum of US$200 million.
“The ceiling would be reached when total exports are around US$6 billion.
The multi-currency system is there to stay, but for it to be sustainable it needs to be oiled, it needs to be supported by foreign exchange, and that foreign exchange comes from exports. That means we need to look after exporters so that they can continue to give us foreign exchange inflow in Zimbabwe which is required to sustain the multi-currency system,” he said.
He said the introduction of bond notes was to provide an inventive to the exporters so that they can continue to bring foreign currency into the country.
Last month, the RBZ said bond notes would start circulating with an initial US$75 million being injected into the market by the end of the year.
“Other countries in the region provide incentives to their exporters. In Zimbabwe’s case we have been using the US dollar which has been appreciating and therefore making our exports uncompetitive, simultaneously, production is going down because of the depressed commodity prices. We are now providing an incentive which at least can mitigate against these negativities,” Mangudya said.
“By so doing, it means exporters are being given a premium to export more. So what we are doing is to restore and maintain the multi-currency system and not jeopardise it,” he said.
“We need to mitigate against capital flight. There is no account for bond notes. Bond notes operate just like bond coins so that they are put in the US dollar account and the exporters will be credited with the five percent in their accounts,” he said.
“Zimbabwe has been importing more than it has been exporting by more than US$2,5 billion per annum, it means the country is consuming more than it is producing. Cumulatively, from 2008 to now, Zimbabwe has exported close to US$23 billion of deficit, that deficit was being financed using exports and Diaspora money.
“If we do not do anything to look after exporters and those bringing in foreign currency, we are not looking after the goose that is laying the golden egg. I stand for improving the lives of the people of Zimbabwe. If we produce more it means more exports, if we do nothing it would be criminal,” Mangudya said. Financial Gazette