The cash-strapped government has finally decided to introduce the Zim dollar amidst the debilitating liquidity crunch. This decision has been muted by the RBZ in order to ease the liquidity crisis. The RBZ will mint $2, $5, $10, $20 Bond Notes equivalent to the US dollar. To disguise the fact the return of the Zim dollar, RBZ says the Zim dollars we be backed by a US$200 million dollar facility.
This is hogwash. If the intention is to increase liquidity, why not simply release the US$200 million into the system? Goodbye stability welcome hyperinflation. Zimbabwe has backslided to 2008 again. This is the cost of a stolen election. The economy cannot be rigged. There is no confidence. Very soon government will start printing money again. There will be a run down on deposits followed by capital flight.
The only thing left is to dissolve government and parliament and call for elections to save any residual value of the battered economy. Zimbabwe’s central bank says it will soon introduce bond notes to ease serious cash shortages in the country. According to The Source, an independent financial and business news entity, the governor of the Reserve Bank of Zimbabwe John Mangudya who made the announcement today, the bond notes are likely to be introduced within the next two months.
Zimbabweans are currently being restricted to a daily withdrawal of $50 due to the cash crisis. The country introduced bond coins a year ago, which were rejected by many people claiming that the nation was attempting to re-introduce the defunct Zimbabwe dollar. The Source further noted that with effect from with effect from tomorrow, 40 percent of all new US dollar receipts will be converted to the rand.
Mandudya said this is designed to restore and promote the wide usage of currencies in the multicurrency basket. The Source also reported that the public will only be able to withdraw a maximum of $1,000, 1,000 Euro and 20,000 rands from their accounts on a daily basis. Zimbabwe recorded unprecedented hyper-inflation figures leading to the scrapping of its own currency nearly a decade ago
Below are highlights of the central bank announcement:
To introduce bond notes in $2, $5, $10, and $20 denominations, backed by a $200 million AFREXIM facility. The bond notes will be introduced in not less than two months from now.
Imposed daily bank withdrawal limits to $1000, Euro 1000, Rand 20 000 with effect from 5 May 2016.
40 percent of all foreign currency receipts from the export of goods and services including gold and tobacco sales to be converted to South African Rand and 10 percent to Euro. Diaspora remittances and NGO funds to exempted from this conversion.
The central bank has established a $200 million export incentive facility backed by AFREXIM to provide a 5 percent incentive on all foreign currency receipts including tobacco and gold.
Banks to allocate foreign currency according to four priority levels.