17 January 2018

Zimbabwe: Bond Notes Here to Stay Says Chinamasa

Photo: New Zimbabwe
Bond Notes.

Zimbabwe's surrogate bond note currency will remain in use until the economy recovers enough to sustain its own monetary unit, finance minister Patrick Chinamasa has said.

The southern african nation abandoned its hyperinflation ravaged currency in 2009 and adopted mainly the US dollar and the South African rand. It introduced the bond notes in 2016 to help ease a shortage of dollar notes.

The notes which are pegged at par with the US dollar have since depreciated, losing more than half their value on the black market.

"Bond notes will stay until we have our own local currency. The governor (of the central bank, John Mangudya) and myself have been at pains to spell out the macroeconomic fundamentals that we need to put right before we can do that," he told a business meeting on Wednesday.

"We need to address the budget deficit, the issue of exports and we need to build foreign currency reserves of at least 3 months. We also need to address low production. Which is why we are coming up with all these proposals to incentivise production."

The bond notes are backed by a $200 million Afreximbank facility and as at June last year $175 million worth of the notes were in circulation.

Zimbabwe is due to hold elections this year and Chinamasa said Treasury had provided the needed funding to the Zimbabwe Electoral Commission (ZEC).

The commission requested $274 million to finance voter registration and the actual elections but was allocated $132 million in the 2018 budget.

"We consider them (elections) critical for confidence building and political stability. So we have well resourced the voter registration and we are going to fully resource the conduct of the elections themselves in terms of logistics and everything else," said Chinamasa.

The country is for the first time using BVR system and is establishing a new voters' roll ahead of the polls. The system uses of unique individual identification techniques such as fingerprints and iris to identify voters.

Previously, voters just used their national identification documents to register.

ZEC which has so far registered 4,9 million voters reviewed its target from 7 million voters to 5,5 million voters.

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