Wednesday, December 07, 2016

Reserve Bank of Zimbabwe Releases More Bond Notes . . .As It’s Set to Draw Down $65m Nostro Stabilization Facility
December 8, 2016
Happiness Zengeni
Business Editor
Zimbabwe Herald

The Reserve Bank of Zimbabwe is set to start drawing down on its $65 million stabilisation facility from a European bank meant to correct the mismatch between current and expected nostro position.

The bank has also released the second batch of $2 bond notes amounting to $7 million under the export incentive scheme bringing the total in circulation to $17 million.

The $65 million facility was provided by Swiss bank and is part of the $215 million the central bank secured from international financiers. Already $150 million from the Africa Export Import Bank (Afreximbank) has been drawn down.

RBZ governor Dr John Mangudya told The Herald Business that the facility, just like the Afreximbank one, will be applied primarily to meet foreign payments of basic goods and to import cash.

“We don’t want to see any shortages of basic commodities so the funds will be primarily applied there and for loan repayments and dividend remittances.” The facilities will close the foreign currency inflow gap following the end of this year’s tobacco selling season. But ultimately Dr Mangudya said there was need to ensure that the measures are supported by a economic transformation agenda.

“Companies need to be more productive, generate employment and revenue for the Government and we are happy that through similar interventions, (like the SI 64) some companies are now operating at full capacity. In fact the foreign currency measures put in place by the RBZ provided fertile ground for SI 64.”

He said Zimbabwe had a good policy matrix but there was need for a good implementation matrix. “We need to reduce import dependency that is the reason why we are emphasising on production; we also need to put in place incentives for corporates and investors in addition to the export incentive.”

Dr Mangudya noted that it is not the Reserve Bank which does not have foreign currency but rather is the nation and for that it was imperative for the country to grow its exports to earn more. “Countries are built on trade”.

He said the RBZ had started paying exporters their incentives in line with the release of the bond notes. “The bond notes were never meant to be a solution to the cash crisis but are an incentive to encourage exporters to produce more.”

In a statement yesterday, Dr Mangudya said the central bank would release the second batch of $2 bond notes amounting to $7 million this week. This brings the total amount of bond notes disbursed to $17 million against a value of $70 million payable to exporters of goods and services under the export incentive scheme.

“We are pleased by the uptake of the bond notes. We shall continue releasing them on a measured or drip-feed basis at a ratio below the value of the export incentive scheme,” Dr Mangudya said, adding the central bank had no appetite to load the market.

Commenting on the quality, Dr Mangudya said the notes were of high quality and that the rubbing off of ink and the variation of the security thread on the notes are quite normal. He also spoke against the abuse of the $1 bond coin following reports that some members of the public were splitting the two parts that make up the coin.

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