GOVERNMENT is in the process of scouting for a new facility to back more bond notes the central bank intends to introduce in the near future, Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya has said.
Already in circulation are 170 million bond notes. The notes were introduced last November to ease biting cash shortages backed by a $200 million Afreximbank loan facility.
Eight months after the introduction, the quasi currency has failed to eliminate winding queues at banks prompting RBZ to consider printing more.
Mangudya said the central bank’s plan has only been delayed by the hunt for another loan facility.
“We are in the process of negotiating those facilities and then we will come back to yourselves after we have made significant progress,” Mangudya told delegates attending a University of Zimbabwe symposium on Wednesday.
Although the bond notes have been considerably stable in value pegged officially at par with the American dollar, they have still led to the resurfacing of the black market where clients pay 1. 20 per every American dollar.
Phineas Kadenge, a senior economics lecturer at UZ, said although introducing bond notes was a wise decision it was not sustainable in the long term calling on the central bank to address underlying economic problems.
“Dollarisation which includes the South African rand and bond notes, I am happy with the arrangement…However our crisis isn’t a crisis of money but a crisis of production,” he said.
The country’s industry is under-utilised operating at 13, 1 percent from last year's 34, 3 percent.
While pleading with Zimbabweans to be informed about economic fundamentals before frustrating policy efforts, Mangudya attributed the improvements in capacity to policies the RBZ has introduced in the recent past which include import restrictions.
"Between January and June we have received $2. 8 billion from exports but how has it been used? 82 percent on imports, two percent income, 14 percent capital remittances and illicit,” he said.
"The major problem is we don't even agree on what's causing our problems. Let's have a common understanding. It's ok if we then disagree on the extent."
Public confidence in the banking system has been singled out as the major challenge to stabilising the sector. Most depositors, since losing their savings when Zimbabwe adopted the multi-currency regime in 2009, strive to keep their money out of the banking system.