5-Cash crisis and bond notes
Government clearly intends to go ahead with the plan to introduce bond notes above the objections of a sceptical public. How will the market react to what Mugabe has called a “surrogate currency”?
Analysts point out that when government eventually adopted a basket of multi-currencies to replace the hyperinflation ravaged local unit in February 2009, the market had long rejected the Zimdollar.
On announcement on May 4, the Reserve Bank of Zimbabwe said the bond notes, backed by a $200 million facility from the African Export and Import Bank (Afreximbank)y were part of measures to ease the cash shortages.
It has since repackaged them as incentives for exporters, who will now get five percent extra on every dollar earned from external sales.
But the market is still bearing scars still fresh from the bearer cheque printing frenzy that fuelled hyperinflation to a record 500 billion percent and led to loss of pensions and lifetime savings. However the government may phrase it, bond notes are a local currency by another name. The fears that the ghost of 2008 may come back to haunt Zimbabwe are legitimate. Is it time to consider switching to the Rand, ditch the US dollar and abandon the bond notes?-The Source
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