Mystery of $200m bond notes facility

IMF denies knowledge of Afreximbank loan

THE International Monetary Fund (IMF) has professed ignorance over the existence of a US$200 million facility from the African Export Import Bank (Afreximbank) which the Zimbabwean government claims will be used to back soon-to-be-introduced bond notes.

By Taurai Mangudhla

Government officials say the surrogate currency is meant to avert a biting cash crisis while promoting exports,as fears abound that the authorities are using bond notes as a ruse to re-introduce a fully-fledged local currency.
Asked whether or not the IMF knew anything about the fate of the US$200m facility which Zimbabwe has repeatedly announced it will get from Afreximbank to back the bond notes, IMF press officer Andrew Kanyegirire said he had no information on the subject.

“I don’t have any information on the Afreximbank loan either,” said Kanyegirire, according to a transcript of an October 8 IMF African department press briefing.

This comes amid fears Zimbabweans could have been hoodwinked by government to believe the existence of a US$200m facility to back the surrogate currency when in fact the authorities will just be printing money into circulation.
The Reserve Bank of Zimbabwe (RBZ) is preparing to launch bond notes amid questions over the legality of the surrogate currency and the lack of a term sheet for the US$200 million Afreximbank facility.

Government sources told the Zimbabwe Independent last week that there is no term sheet between the RBZ and Afreximbank on the US$200m facility backing the bond notes, raising eyebrows over the monetary issue.

“The term sheet of the US$200m is unknown to the public and that ordinarily raises a lot of questions on such a facility. The salient features such as the tenure and how the regional bank will benefit from this facility has largely been shrouded in secrecy,” a source said. “What role did parliament play in this? All these questions beg for answers, given the quantum involved.”

A term sheet serves as a template to develop more detailed legal documents. Once the parties involved reach an agreement on the details laid out in the term sheet, a binding agreement or contract that conforms to the term sheet details is then drawn up.

Afreximbank regional manager for Southern Africa, Gift Simwaka, last week declined to comment on the facility, referring questions to the RBZ.

Suspicion over the facility has been heightened by the fact the regional bank has not posted on its website anything to do with the US$200m export facility, raising more questions on its transparency. Tellingly, other loans extended to Zimbabwean institutions by the Cairo-based bank are openly listed.

Last week, Vice President Emmerson Mnangwanwa said Zimbabwe is finalising legal provisions to introduce the bond notes with a view to having a mode of transaction which the country can control. His remarks have stoked fears that the authorities will print more than the US$200 million, especially given pressing recurrent expenditure items that have seen 97% of the US$4 billion national budget being gobbled up by salaries, resulting in successive budget overruns.

Responding to another question on the current status of Zimbabwe’s negotiations with the IMF about the debt clearance programme, especially after meetings scheduled for September between the two parties were cancelled, Kanyegirire said: “In the case of Zimbabwe, there’s really not a significant change in terms of our engagement, the mission in September was delayed for some technical reasons, not having to do with the overall structure of the dialogue. So there is not much new information I can provide, and update you there”.

In May, the RBZ announced it would introduce bond notes as a 5% incentive to exporters. The apex bank said the incentive would be discontinued once exports reach the US$6 billion mark from US$1,125 billion for the six months to June.

10 Responses to Mystery of $200m bond notes facility

  1. Elie Makachakacha October 14, 2016 at 8:18 am #

    Thank you Mr. Editor this is the journalism we yearn for not to shout until the voice becomes hoarse over an issue which would have become public.

    It is now time to bear more pressure on the authorities and the regional bank to come clean on the existence of the said facility. Surely can we be led to the abattior without even shedding a tear?

  2. Nyimo October 14, 2016 at 7:43 pm #

    Apa chakachaya! Tinokabhena ka bond note ikako kakayita marara fasta fasta. Varume kana mapererwa munovumidzwa kusiya basa zva makuyita izvi muchademba. Takambo kuudzayi kuti bond note i-bearer cheque mukaramba. Handeyi tione! Chakatanga ndicho chakangwadza.

  3. tamuka October 14, 2016 at 9:41 pm #

    Good journalism thanks bhora rava mumateya.Tajamuka heyo nyaya machinda yapinda munhandare.

  4. TAFARA YAMURAI ZHOU October 15, 2016 at 2:10 pm #

    Is this real? These guys are not serious! Honestly!

  5. Agro Cheq October 16, 2016 at 6:45 am #

    Takagara tazviona kuti chitsotsi chega chega chiri apa. Hatingakangamwe kwatakabva

  6. Gava Redhorobha October 16, 2016 at 2:17 pm #

    It always seemed like a suspicious pitch – but if this is true then we are well and truly stuffed.

  7. Gandanga October 17, 2016 at 9:44 am #

    This is the kind of investigative journalism we need, well done Taurai Mangudhla!!!! Please also follow up with the African Development Bank or The RBZ Board, what do they know??? we need a weekly update on this please!

  8. MAURICE LEVY October 19, 2016 at 1:06 pm #

    WHY GIVE AN EXPORT INCENTIVE IN BOND NOTES? SURELY IF EXPORTS INCREASE BECAUSE OF THE INCENTIVE THEN PROPER DOLLARS CAN THEN BE DISHED OUT WITH THE EXCESS MONEY DERIVED FROM THE INCREASED EXPORTS.

    WE DON’T SEEM TO BE GETTING THE PROPER INFORMATION FROM THE AUTHORITIES.
    THEY TELL US EVERYTHING EXCEPT WHAT WE NEED TO KNOW.

    WHY IS AFREXIMBANK DECLINING TO COMMENT ON THE ISSUE? WHAT GUARANTEE HAS THE PUBLIC GOT THAT ONLY $200 MILLION BOND NOTES WILL BE PRINTED?

    IN ANY CASE HOW WILL ONLY $200 MILLION SORT OUT THE PROBLEM. THIS PALTRY AMOUNT IS NOT GOING TO GET US OVER THE $6 BILLION MARK THE GOVERNMENT SAY IT IS TRYING TO ACHIEVE. HOW IS PRINTING ONLY $2 AND $5 NOTES GOING TO HELP THE SITUATION. WE SEEM TO BE HEADING BACK TO THE DAYS WHEN WE NEEDED BASKETS AND BAGS TO CARRY OUR MONEY.

    NO WONDER SO MUCH SUSPICION HAS ARISEN. THE MOMENT THE BOND NOTES DEVALUE THERE WILL BE SUCH AN OUTCRY THAT THE GOVERNMENT WILL REGRET EVER HAVING GONE THIS ROUTE.

    IF THE GOVERNMENT IS GENUINE ON THIS ISSUE LETS HAVE SOME PERTINENT ANSWERS.

  9. viva zim October 20, 2016 at 10:59 pm #

    They will run out of ideas,give them enough long rope to tie themselves.Chinjayi maitiro enyu awo,maitiro enyu chinja.

  10. Sagitarr October 21, 2016 at 9:05 am #

    When last did you get an honest statement or comment from this so-called government?

    They are in this position by fraud – stealing election results, disappearing with them for 5 weeks, mangling them so that they get back into “power”, power to do what?one might ask. To steal some more. Our country is being ruined (not ruled, governed or led) by a cartel of thieves.

    The sooner most people realize this the better our chances of getting progress back on the national schedule/agenda.

    Has anyone noticed how the “govt officials” are ALWAYS at odds with those actions that will:-
    1. reduce poverty
    2. infuse real citizen freedom for one to freely support and vote for an individual or party of their choice as covered by Universal Declaration of Human Rights articles 18 to 23
    3. bring genuine public happiness (not rented happiness)
    4. reward honest and hard work
    5. bring justice especially on abused

    They are thieves, period. To call this a government of the people is a misnomer, which people? People who support thievery? tear gas the public? spray people with water (which is in short supply for domestic purposes)? If this is what they fought for THEY ARE MAD!

AMH logo

© 2017 The Zimind. All Rights reserved.