Zimbabweans line up at banks as bond notes on par with dollar
HARAREMay 06, 2016 - 12:00 am GMT+3
May 06, 2016 12:00 am
Zimbabweans formed long queues outside banks on Thursday, after the government slapped new limits on cash withdrawals and announced that "bond notes" on par with the dollar would be introduced. The government adopted United States and South African currencies in 2009 after high inflation - which peaked at 231 million percent - rendered the local currency unusable.
But a shortage of foreign notes led Reserve Bank Governor John Mangudya to announce a raft of measures on Wednesday, including limiting withdrawals to $1,000, or 20,000 South African rand.
Mangudya said the central bank would also print dollar-equivalent bond notes, "which are currently at the design stage," to ease the cash crunch.
Bond coins were introduced in 2014 to tackle the problem of small change. The new notes, in denominations of $2, $5, $10 and $20, will play a similar role, acting as tokens.
They will be backed by a $200-million support facility provided by Afreximbank (Africa Export-Import Bank).
"This does not signal the reintroduction of the Zimbabwe currency," Mangudya said. "The fundamentals are not yet right for its comeback. This is just a measure to curb illicit flows out of the country."
Economists blame the cash shortage on a trade deficit which saw the country's import bills standing at $490 million in the first quarter, against $167 million in exports. Apart from limits on withdrawals, the amount of cash that can be taken out of the country has been cut from $5,000 to $1,000.
In queues outside Zimbabwean banks, tempers were running high. "I am supposed to be at work, but here I am queueing since yesterday," said Monique Fore, 39, a bursar at a school in Harare. "It's becoming embarrassing explaining to my landlord that I can't withdraw money to pay rent."
In some cases, banks have limited the amount that can be taken out to $200, well below the maximum set by the government.
Shadreck Mafukeni, a 57-year-old carpenter working for a furniture manufacturer, said his salary had been deposited in the bank on Tuesday but he had been unable to withdraw anything. "I need to pay rent, my children's school fees, and I also need to repay debts to several people to whom I owe money. I have used the little money I had at home on the bus fare. If I don't get money today, I will walk back home."
Zimbabwe's economy has been on a downturn for over a decade, with mass unemployment, low production and cash shortages. The country relies on imports, even for such basic commodities as cooking oil, bath soap and toothpicks.