MDC-T Shadow Minister for Finance says bond notes are Zimbabwe dollars

MDC deputy secretary-general Tapiwa Mashakada

Movement for Democratic Change Shadow Minister for Finance Tapiwa Mashakada says the Reserve Bank of Zimbabwe Amendment Bill which is aimed at legalising bond notes, treats the notes as Zimbabwe dollars and does not talk about the export incentive at all.

Contributing to the debate on the second reading of the bill, Mashakada said the bond note was premised on a 5 percent export incentive but the bill silent on that.

“The original thinking was not to make it a general currency for everybody.  It was to issue it out as an export incentive, which would then percolate in the financial system as and when exporters are paid, but that is not the case,” he said.

“So, in this Bill you will find that the issue of export incentive is silent.  The Bill is silent on the original question of the introduction of the bond notes.  It does not refer to the export incentive at all.  It is now treating bond notes as Zimbabwean Dollars, asking this House to embrace the introduction of new legal tender, which is the Zimbabwean Dollar.

“It detracts from the original thrust of export incentive.  I thought the Minister would re-couch the Bill so that it reflects the original intention that it is going to be a 5% export incentive.  As the Bill stands, it is just like any other currency that is being introduced which is not based on any export incentive.”

Full contribution

HON. DR. MASHAKADA: Thank you Hon. Speaker.  I rise also to proffer a few comments on this Bill that was tabled sometime back.  First of all, I need to support the remarks by the Chairperson of my Committee on the problems that people are facing in accessing their monies in the banks.

The introduction of the bond note has not brought the necessary or the much needed relief to the consumers and the general public.  We all know that the queues are getting longer every day, it is a common cause.  One would hope that the introduction of the bond notes and coins would ease the general liquidity crisis.  From a macro-economic point of view, this issuance of bond notes in dribs and drubs will affect aggregate demand.  You know, for economic activity to respond so that we stimulate production and economic activity, there has to be aggregate demand which is backed by adequate purchasing power.

If people do not have adequate purchasing power, adequate demand becomes depressed and it is also a backlash on the general economic activity in the country.  That can slow growth.  As you know Mr. Speaker Sir, one of the fast moving or fast growing sectors is the commercial and financial services.  These sectors depend on transacting on spending and if that is limited, that can invariably affect the level of growth in the country.

Coming to the Bill itself, I must say that the character of the bond notes depends on two things, which this House must understand.  The first thing is that it is anchored by a US$200 million Afriximbank facility.  I would have expected this House to be provided with the term sheet of the Afriximbank to inspire confidence so that we know that this bond note is indeed confined to the US$200 million Afriximbank facility.  So, I will call upon the Minister to try and provide that term sheet so that we can tell the people whom we represent that this money is not just being printed.  It is actually based on something, which is the US$200 million facility.

The second thing is that the bond note is premised on a 5% export incentive.  That was the original thinking or logic behind the introduction of the bond note.  The original thinking was not to make it a general currency for everybody.  It was to issue it out as an export incentive, which would then percolate in the financial system as and when exporters are paid, but that is not the case.  So, in this Bill you will find that the issue of export incentive is silent.  The Bill is silent on the original question of the introduction of the bond notes.  It does not refer to the export incentive at all.  It is now treating bond notes as Zimbabwean Dollars, asking this House to embrace the introduction of new legal tender, which is the Zimbabwean Dollar.

It detracts from the original thrust of export incentive.  I thought the Minister would re-couch the Bill so that it reflects the original intention that it is going to be a 5% export incentive.  As the Bill stands, it is just like any other currency that is being introduced which is not based on any export incentive.

The other comment I have is on Clause 4.  I am not a lawyer, but I am not too sure whether a law can be applied retrospectively.  We have advocates here, they will educate us.  The other comment Hon. Minister is on the interpretation itself.  I refer you to the clause, the definition of a unit of a bond note, you say it means a unit of one dollar (1$) or multiple thereof in which a bond note is denominated.

What about coins which are less than one dollar (1$).  I think the definition should make it clear that it is a unit of a cent not a dollar because the minimum unit in a bond note is the cents and then the dollars.

The other comment is on Clause 4 (3) where you say that bond notes issued by the Reserve Bank of Zimbabwe shall be legal tender in all transactions in Zimbabwe as if each unit of a bond note is exchangeable.  ‘As if’ it would appear like it is fiction.  I am sure you can re-couch it to reflect the parity that you were talking about.  If you say ‘as if’ it really defeats the confidence.  Same applies to Clause 4 (4), when you say that it will be deemed to be equivalent to; it is equivalent to.  It cannot be deemed.  I hope you can address these technical issues which I have raised.

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