IMF says bond note cannot solve Zimbabwe’s economic problems

MacDonald Dzirutwe | HARARE

Zimbabwe’s “bond note” surrogate currency will not solve its economic problems, the International Monetary Fund said, adding that only comprehensive reforms would address a fiscal crisis.

The southern African nation last year introduced bond notes, which officially trade at par with the U.S. dollar and are backed by a $200 million bond from the African Export and Import Bank.

http://cnbc.africa/news/2016/11/01/mugabe-decrees-regulations-paving-way-for-bond-notes/

The director of the IMF’s Africa department, Abebe Aemro Selassie, told reporters in Washington on Sunday that limited foreign exchange inflows and a lack of monetary policy tools since Zimbabwe’s adoption of the U.S. dollar in 2009 had worsened cash shortages.

“We think that, going down this one (bond) note route, in and of itself, will not address the challenges that the country has,” Selassie said, according to a transcript of the media briefing.

“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.”

The central bank says it has so far printed $121 million in bond notes but a high demand for cash has meant that the surrogate currency is also in short supply.

Importers, including mining companies and manufacturers, say they are facing serious delays in paying for imports because banks have no dollars to make the payments.

“So, 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,” Selassie said.

(Reporting by MacDonald Dzirutwe; Editing by Olivia Kumwenda-Mtambo and Andrew Roche)

Partner Content

How COVID is teaching us to be better communicators

After years of having served as a senior communications practitioner, I’ve learned that the most important attribute of...

WOMENS MONTH WEBINAR ON RAIL

As we commemorate Women’s Month, we also celebrate remarkable women in the transport sector, while focusing on rail in particular. Given the...

Digital Payments and their Impact on Small Businesses in the Beauty Industry

Over the last 10 years one of the few constants has been the growth of technology and the impact it has had...

Subscribe to our newsletter

Sign up for free newsletters and get more CNBC AFRICA delivered to your inbox