SA opposition criticised for inviting US to observe poll
Reuters (File photo) / Zimbabwean Finance Minsiter Chinamasa says the bonds will "stop the country from being a fishing pond for the US dollar"
Zimbabwe will introduce bond notes and restrict foreign currency spending to vital commodities to limit dollars leaving the country and exacerbating the nation’s cash crunch, Finance Minister Patrick Chinamasa says.
“We believe the … bond notes will help stop the country from being a fishing pond for the US dollar,” Chinamasa said on Wednesday at the African Development Bank’s annual meetings in Lusaka. “A lot of companies, so-called investors, come to fish out our US dollar resources and that is what is producing the shortage,” he said.
Zimbabwe, which abandoned its own currency in 2009 because of hyperinflation, trades mainly in dollars; while the rand, euro, Botswana pula, yen, yuan and Indian rupee are also legal tender. The central bank limited cash withdrawals from ATMs earlier this month as the ailing economy caused dollar supplies to evaporate, and started a programme to explain the introduction of bond notes that will be worth their exact counterparts in US dollars as currency.
The Zimbabwean central bank has introduced measures to manage “the foreign currency earnings that we earn as a country and make sure that money is used not to import trinkets, but is used to import vital commodities”, Chinamasa said.
“We have produced a priority list which will be used by the bank to guide them on what items they can use foreign currency to import.”
The shortage highlights the struggle President Robert Mugabe’s government faces in reviving an economy half the size it was 15 years ago, according to government estimates, with about 90% of the population out of formal employment.
The authorities abandoned an earlier plan to convert half of their export earnings into rand and euros and said it would require 50% of those earnings to be transferred to a Reserve Bank of Zimbabwe account.
Zimbabwe’s growth forecast for 2016 has been cut to 1.1%-1.5% this year, from 2.7% earlier, as the region’s worst drought in decades led to lower farming output, Chinamasa said.
Gross domestic product rose an estimated 1.1% last year, according to the International Monetary Fund (IMF). Earlier this month, the lender said the nation had to repay money it owes the IMF, World Bank and African Development Bank before to get a new IMF loan.
Chinamasa said Zimbabwe could borrow money as long as it was clear about the purpose of the loan. “We have a policy that any new loans should not go towards consumption, but towards … infrastructure.”
Leave a Reply
Be the First to Comment!
You must be logged in to post a comment.
You must be logged in to post a comment.