Zimbabwe in bid to calm markets over new local currency

Reserve Bank of Zimbabwe Governor John Mangudya gestures during an interview in Harare, March 16, 2016. REUTERS/Philimon Bulawayo

Harare – The Zimbabwean central bank says the troubled southern African country will not introduce a local bond currency next month if there are no exports as pressures mounts for Harare to scrap its plans for a local legal tender.

Zimbabwe abandoned its own currency in 2009 after the Zimdollar lost value, leading to record hyper-inflation in the country.

Following the adoption of multiple currencies and the subsequent cash troubles the country is facing, President Robert Mugabe’s government has said that the $200m bond notes will be factored into the economy as an export incentive.

The government has faced protests over the bond notes amid fears and concerns that Harare is bringing back the Zimdollar through the back door. Business executives in Zimbabwe say they are awaiting to see the impact of the introduction of the local currency.

“There will be no bond notes if there are no exports,” said Reserve Bank of Zimbabwe governor John Mangudya.

Alex Mhembere, the chief executive officer of Zimplats said at a briefing in Harare yesterday that the Impala Platinum unit will provision for the 5% export incentive “as and when it comes”.

SA companies such as Implats, Anglo Platinum and Sibanye Gold among others are the major exporters from Zimbabwe. Gold, platinum, other minerals and tobacco are the top export products from the country.

“It probably is the right thing to calm the market because there has been an outcry and business is concerned as much as investors and the general public.

“But what may change is the way and pace of the phasing in of the bond notes but the plan will not be abandoned,” said a government official on Thursday.

Bankers in Zimbabwe say it has also become difficult to process dividend remittances to investors outside the country because of cash shortages the country is battling.

Banks are limiting cash withdrawals while cross border remittances now require approvals and will be processed using a priority list.

The central bank chief has sought to calm investors on the ZSE, saying they will not be affected by the introduction of the local bond notes while two finance managers in Zimbabwe said the bond notes will have to be factored into company planning provisions for possible full-scale usage within the economy.

Mangudya however said capital appreciation and dividends fall in the top priority list for outward bound remittances from Zimbabwe.

“Bond notes issued for the purpose of incentivising exporters will circulate in the market alongside currencies within the multi-currency system. No separate customer accounts will be maintained for bond notes,” Mangudya added. – News24

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