IMF engages govt over bond notes

THE International Monetary Fund (IMF) will engage government over the introduction of bond notes and other measures aimed at stimulating exports amid public outcry, IMF deputy spokesperson for the communications department William Murray has said.

The likely impact of government’s recent decision to increase its food imports and mitigate the impact of crop failures on its people and the strengthening of Zimbabwe’s multi-currency system through the conversion of export earnings to euro and rand will also be considered, said William in a June 2 press conference.

“We are currently assessing the implications of the measures on the economy, including the more recently announced issuance of bond notes; and we’ll engage in further discussions with the authorities with regard to their strategies,” reads part of the transcript of William’s press conference in Washington.

“So, we’re going to have more discussions with the Zimbabweans on this strategy,” added William’s apparently showing the IMF’s concern.

Locally, Zimbabweans have been spooked by Reserve Bank of Zimbabwe governor John Mangudya’s announcement the country was to introduce US dollar backed bond notes.

The move brought back memories of the 2008 hyper inflationary environment that was also characterised by shortages of basic commodities. Panic withdrawals became the order of the day and a panic buying spree was to follow, causing a shortage of some basic grocery items such as cooking oil.

“Zimbabwe has been talking about printing U.S. Dollar bonds, commentators in the field are suggesting this might be a move back towards a currency and the temptation to print lots of money and the resultant eye-popping inflation that we previously saw with the Zimbabwe authorities and the system there. Is this a concern of the IMF at the moment? Are you talking to the Zimbabwe authorities about this issue?,” asked a participant during the presser.

Williams said the IMF staff understands that the Zimbabwean government and authorities have introduced a number of measures to deal with ongoing cash shortages.

“The shortages are mainly the result of weak external inflows and a decline in prices of commodity exports. More recently the situation’s been aggravated by the drought afflicting Zimbabwe,” he added.-Taurai Mangudhla

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