Could Bond Notes Be A Full Fledged Currency For Zimbabwe By Year End?
For the longest time there has been so much anxiety over the uncertainty about the Zimbabwean economy. Since 2009, Zimbabwe has been a multi currency economy with the US Dollar being the main currency of trade. Due to cash shortages the government then implemented the bond note as a temporary relief. According to an economic consultant in the Office of the President and Cabinet Ashok Chakravarti, bond notes are likely to end up accounting for 50% of the money in circulation by year-end.
According to Chakravarti, “By December 2017, bond notes may be 50% of currency in circulation. It is then no longer a surrogate currency, but a new Zimbabwe dollar.”
Due to the current dominance oing bond notes a both the formal and informal markets, the Reserve Bank of Zimbabwe (RBZ) has been forced to inject more of the bond notes currency to alleviate currency gaps on the market.
However the local economist added that, “Dollarisation is a dead end unless the country has a source of United States dollars.”
Currently the central bank is importing about $5 to $10 million in United States dollars cash every fortnight, instead of the originally envisaged $10 to $15 million.
On the parallel market, bond notes are trading at a 5 to 7% discount vis-à-vis the United States dollar, and electronic balances reportedly exchange at a 15 to 20% discount.
