Source: Rejoice Chingwaru, NewsDay
ZIMBABWE Congress of Trade Unions (ZCTU) president, Peter Mutasa has said the introduction of bond notes will not address the current cash crisis facing the country, including the continued economic decay.
Speaking at a Press conference after meeting Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya, in Harare yesterday, Mutasa said the introduction of bond notes would not deal with issues of corruption and structural challenges, which were the main source of Zimbabwe’s economic decline.
“We believe that bond notes do not address the structural challenges, fiscal indiscipline and corruption, which are at the heart of the underperformance of the economy and there is need for a holistic approach to the problems the country is facing, not this piecemeal approach,” he said.
The government is set to introduce bond notes next month, which are said to be backed by a $200 million facility from Afreximbank Bank.
Mutasa said the injection of $200 million worth of bond notes would not alleviate the cash crisis being faced by Zimbabwe, as it only constituted a small percentage of the cash needed to holistically deal with cash shortages.
“Even at best, the injection of $200 million will not be able to address the liquidity problems faced by the economy. $200 million amounts to only 3,4% of banking sector deposits of US$5,913 billion as at June 2016 and the $75 million to be released by the end of December only amounts to 1,3% of banking sector deposits,” he said.
Mutasa described bond notes as a “threat to the sustainability of the financial sector” as Zimbabweans had lost confidence in the decisions made by the banking sector following the introduction of bearer cheques almost a decade ago.
“The announcement of the introduction of bond notes resulted in a run on deposits, externalisation and withdrawal of deposits from the banking system, as it fed on past experiences with the Zimbabwean dollar during the hyper-inflationary period.
“Bond notes have affected confidence in the financial sector and they are a threat to the sustainability of the financial sector,” he said.
Mutasa also expressed his concern over RBZ’s advocacy of use of plastic money, which he said was expensive for the people. “RBZ is advocating for the use of plastic money and ZCTU is concerned with the high costs of bank charges per each transaction, which is costly for the people,” he said.
Source: Rejoice Chingwaru, NewsDay