The Reserve Bank of Zimbabwe governor John Mangudya announced that the central bank will print additional bond notes worth $300 million in an effort to ease cash shortages. Mangudya said the surrogate currency will be backed by another facility from the African Export-Import Bank (Afreximbank).
The continental bank had previously backed a $50 million facility for bond coins in 2014 and $200 million for the initial bond note release last November.
The announcement has however raised fears that the country could return to the 2007-2008 era of money printing and hyperinflation.
Considering that the bond note can’t be used outside Zimbabwe, and is meant to trade at par with the United States dollar, shortages of foreign currency persist. Traders are now buying foreign currency on the black market which already is a red flag.
Zimbabwe has been using a multi currency system since 2009. This came at the height of hyperinflation and shortages between 2007 and 2008. Zimbabwe has been trading using the US dollar Rand, Pula and Pound with the US dollar being the predominant currency.
Mangudya has maintained that the country is not ready for a return of the currency.