Zimbabwe’s surrogate currency, the bond notes introduced last year, have recieved a lot of flack from all corners. Zimbabweans had fought long and hard to stop their introduction as the means of tender in Zimbabwe and now they have a world body backing up reservations that they voiced.
The bond notes officially trade at par with the U.S. dollar and are backed by a 200 million dollars bond from the African Export and Import Bank. It is also expected to be accepted by all businesses and retailers in Zimbabwe although a viral video in December showed a retailer from a Pick n Pay store
refusing to accept the bond note.
Arguments against Zimbabwe’s surrogate currency by Zimbabweans have ranged from fears that retailers would not accept it to a belief that it will lead to another hyperinflation.
IMF sceptical about Zimbabwe’s surrogate currency being the answer to her problems
On Monday the International Monetary Fund said that Zimbabwe’s surrogate currency will not solve its economic problems and that only comprehensive reforms would address the fiscal crisis in the country.
Director of the IMF’s Africa Department, Abebe Aemro Selassie, spoke to reporters in Washington about how limited foreign exchange inflows and a lack of monetary policy tools since Zimbabwe’s adoption of the US dollar in 2009 had worsened cash shortages. A transcript of the media briefing quoted her as saying;
“We think that, going down this one (bond) note route, in and of itself, will not address the challenges that the country has,”
“So, it’s very important to have a more comprehensive policy package which also addresses a lot of the fiscal challenges that the country faces, a lot of the structural reforms that have to be done.”
Her words are underscored by the fact that the operations of the bond notes as is has not had a very smooth running. According to Zim’s central bank it has so far printed 121 million dollars in bond notes, but a high demand for cash has meant that the supply is still not enough.
Minining companies, manufacturers and other importers say they are facing serious delays in paying for imports because banks have no dollars to make the payments.
Despite all this, Zimbabwe’s central bank will be wary in printing more of the bond notes to avoid a case of hyperinflation and so as Selassie stresses, “…it’s, again, more of a holistic package of reforms that are required to get Zimbabwe out of the place it’s in right now.”