Reports: Zim bond notes won’t be introduced as soon as anticipated

Zimbabwe’s media is saying the notes won’t be in circulation until August at the earliest.

FILE:  Central Bank chief John Mangudya says the notes take at least four or five months to design and print. Picture: WikiCommons.

HARARE - Reports from Zimbabwe say that bond notes, the much-feared version of US dollars that the Central Bank says it plans to give to exporters, won't be introduced as soon as had been thought.

Newspapers are saying the notes won't be in circulation until August at the earliest and possibly even as late as October.

Central Bank chief John Mangudya says the notes take at least four or five months to design and print.

He has not confirmed exactly when that process started, but newspapers in Zimbabwe are now saying it means the notes won't be introduced until August and possibly not even until October.

There's still a lot of resistance to the bond notes, Zimbabweans have clear memories of 2006 to 2008, when hyperinflation reached a peak, and bank note printing was reckless.

The authorities are keen to stress that the bond notes are not an attempt to sneak the Zimbabwean dollar back into the country and they say they will only print $200 million worth of them.

Since January 2009, the southern African country has used foreign currencies, including the US dollar, British pound and Chinese yuan after dumping its unloved currency that came to symbolise a decade of economic collapse.

Since March however, the economy, grappling with a devastating drought, has faced a shortage of notes, unnerving depositors who fear the Reserve Bank of Zimbabwe turning on the printing presses again will make their cash worthless.

In an effort to ease the shortage, the Central Bank last week also set priorities for imports and imposed limits on cash withdrawals.

INVESTORS' HEIGHTENED ANXIETY

Earlier this month, an official at a Harare-based investment firm reported a five-fold jump in the number of individuals liquidating their investments in the week after the central bank's new measures.

To try to calm jitters that more money would be printed than is required, the RBZ plans to contract a German printer and keep the value of the new notes below $200 million or 4 percent of the total deposits held by banks.

The notes, expected in two months, will be backed by a $200 million bond from the African Export and Import Bank and will be at a par with the dollar.

Central bank governor John Mangudya told reporters he sympathised with Zimbabweans, adding that "the fear factor is very high" because of what happened in the past.

'PAINFUL MEMORIES'

The Bankers Association of Zimbabwe and manufacturers have given their support to the printing of new notes and curbs on imports. But many are still sceptical.

The RBZ acts independently, but after past experiences, there are doubts whether the bank can resist if pressured by the government to print more money, especially ahead of the next elections in 2018.

President Robert Mugabe's rivals say cash shortages and printing of new notes show his inability to steer the economy. The government blames Western sanctions and drought and has promised major reforms to woo back foreign lenders.

Cash shortages have also delayed raw material imports for some mines, farmers and manufacturers.

Under the new rules, exporters would be paid a 5 percent bonus in local notes, which can be exchanged for dollars and will be circulated in the economy.

South African-based NKC African Economics said the cash shortages showed a country on the brink of a currency crisis, adding this could cause instability at a time of high tension in Mugabe's Zanu-PF over who will succeed the 92-year-old ruler.

Additional information by Reuters