Zimbabwe will print its own version of the
U.S. dollar, as an ailing economy fuels a severe cash shortage in the
southern African nation. John Mangudya, Zimbabwe’s central bank
governor, said Thursday the so-called bond notes will be backed by $200
million in support from the Africa Export-Import Bank, according to the
Herald, a local government-owned newspaper.
“It is not an overnight process,” Mangudya told
the Herald when asked what date the bond notes will be issued. “We are
still working on a design which will be sent for printing outside the
country. The notes will not be introduced immediately but probably
within the next two months.”
The specially designed dollar notes will come
in denominations of two, five, 10 and 20. They will also have the same
value as their U.S. dollar equivalents. The bond notes are an extension
of so-called bond coins of one, five, 10 and 25 cents which the central
bank introduced in 2014 and are pegged to the value of the U.S. dollar.
The central bank governor stressed the
introduction of the bond notes does not signal the return of the defunct
Zimbabwean dollar, which the country ditched in 2009 amid sustained
hyperinflation. Residents have since been using the U.S. dollar as well
as several other foreign currencies, including the South African rand
and the Chinese yuan. To curb the U.S. dollar shortage, Mangudya also
set a $1,000 limit on how much cash can be taken out of the country and
encouraged residents to use the rand since South Africa is Zimbabwe’s
top trading partner, BBC News reported.
The rand, however, has suffered from the brunt
of a general sell-off in riskier assets amid fears of a global economic
slowdown at a time when South Africa’s own economy is also struggling
to grow. Ratings agencies have threatened possible downgrades should the
South African government show a lack of commitment to cutting its
budget deficit, Reuters reported.
The situation has made Zimbabweans reluctant
to hold on to rand notes because they are worried the currency won’t
maintain its value against the U.S. dollar. As Zimbabwe faces deepening
economic woes after drought weakened vital agricultural production and
disrupted hydro power generation, cash-strapped residents are lining up
outside banks in the capital to get dollars to pay for everything from
groceries to school fees.
“Unless the country takes bold reforms, the
economic difficulties will continue in [the] medium term,” the
International Monetary Fund said in a report
Wednesday, after the most recent consultation with Zimbabwean
officials. “Given the outlook for the global economy, growth is
projected to remain below levels needed to ensure sustainable
development and poverty reduction.”
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