Bond notes to start circulating in October

Zimbabwe’s central bank will introduce the controversial bond notes to the market at the end of October it has announced.

The token currency will operate within the basket of currencies in circulation as the Reserve Bank of Zimbabwe moves to tackle the crippling cash shortage. Zimbabwe blames the current crisis on the rampant smuggling out of physical US dollars, the preferred currency among Zimbabweans.

Notes will come in $5 and $2 denominations (pegged 1:1 against the US dollar) with a view of getting $75 million in circulation by end of the year.

The bond note has been controversial with some quarters. The measure coincides with the current strange situation between the rest of cabinet and the Finance ministry. Minister Patrick Chinamasa in his Fiscal Policy announced the scrapping of bonuses for civil servants, a moved quickly kicked out of touch by President Robert Mugabe and some members of cabinet.

Speculation is that the timing of the introduction of bond notes coincides with around the time bonuses will be due although with just $75 million on the market by year end it is a stretch.

With the distrust of the token currency, perhaps we might see an increased use of the rest of the basket of currencies.

This latest action will do little to reduce the tension that has resulted in opposition party protests in Harare’s CBD.