Zimbabwe, which does not have its currency in circulation, will introduce "bond notes" only as an incentive to exporters as part of measures to ease cash shortages, but not to replace the U.S. dollar as the main circulation currency, particularly to pay wages, the country's central banker said Monday.
Governor of the Reserve Bank of Zimbabwe John Mangudya told a committee of parliament that the central bank was importing 15 million U.S. dollars, more money than what it should, to offset the poor exports and massive externalization of the U.S. dollar, which created the flight of the greenback.
Foreign and local banks in Zimbabwe were hit hard by the liquidity challenges over the past few weeks. Many ATMs ceased to function and banks imposed daily cash withdrawal limits, 250 U.S. dollars for personal accounts, as queues became a regular scene at bank branches.
"We have 15 million dollars that has come in to clear the queues. We want the current (bank) queues cleared by Thursday this week," Mangudya said.
Zimbabwe adopted use of multiple currencies in 2009 after dumping its currency that had been rendered worthless by hyperinflation.
Out of the nine foreign currencies in use, the U.S. dollar is the dominant currency. Mangudya said Zimbabwe had become a fishing ground for the greenback, resulting in the cash shortages currently being experienced in the economy.
Measures announced by the central bank last week to deal with the cash crisis included imposing withdrawal limits, converting corporate export receipts to other currencies, prioritizing importation of raw materials, fuel, capital goods and intermediate goods, and introducing new bond notes.
Mangudya explained that bond notes will be introduced as an incentive to exporters to improve the country's exports which have remained very low when compared to imports. The bond notes were not coming to replace the U.S. dollar but would be paid as a 5 percent export incentive to exporters, he said.
There was no fear that workers will have their salaries paid in bond notes, the governor added.
"The purpose of the bond notes is to deal with an incentive for exporters. But I think people are now confusing to say bond notes are coming to cater for cash shortages, no, this is an incentive scheme for exporters," Mangudya said.
He said the central bank had seen it prudent to introduce the bond notes instead of disbursing the real cash into the banks from a 200-million-U.S.-dollar facility provided by the African Export-Import Bank over fears of fund externalization.
The central bank has said close to 2 billion U.S. dollars was siphoned out of the country in 2015 and another 50 million dollars in the past three months.