Zimbabwe says no to South African rand and more bond notes


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Zimbabwe will not adopt the South African rand as its major currency because the country’s problem is not the currency but localized production, the governor of the Reserve Bank of Zimbabwe John Mangudya told the Sunday Mail.

Zimbabwe introduced multi-currency use in 2009 and at one time the rand dominated the market especially in Bulawayo but the United States dollar has since taken over.

“We have always said that the fundamental problem of this economy is not about currency, but localised production, stimulating exports and discouraging imports of finished products at all costs,” Mangudya said.

“We are spending more time talking about currency than production.

“We can’t talk of adopting the rand as our major currency as we already have it in the multi-currency basket introduced back in 2009.

“We continued to use it until such a time when some unscrupulous dealers started rejecting it.

“What guarantee do we have that if we adopt it as our major currency it won’t suffer the same fate of externalisation and hoarding?

“Worse still, it takes only a few hours to reach South Africa.

“We continue to urge our people to have fiscal discipline and to desist from cash hoarding and capital flight.

“The Bank Use and Promotion Act has been sharpened to deal with perpetrators.

“By so doing, we are encouraging dealers, traders and wholesales to bank surplus cash to ease the liquidity crunch.”

Mangudya also said he was not going to add more bond notes into circulation either.

He argued that the US$900 million and $130 million in bond notes and coins already in circulation was sufficient for local transactions.

 “As for now, we have decided not to continue issuing out new bond notes into the market as we have enough for transactional processes … We shall when people have fiscal discipline with the money that is available,” he told the Sunday Mail.

“Since last year March, we have suffered due to some detractors who have bad intentions of hoarding and externalising cash in a bid to destabilise our recovery framework, but we won’t fold hands to leave them to do as they will.

“To deal with such bad characters, we have brought into play (the) Bank Use Promotion Act to ensure and encourage people like traders, wholesalers and other dealers to bank their money. And from this legal instrument, we have taken to court over six firms since the start of the year and we shall continue doing that until the people have discipline.”
 

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The Insider

The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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