HomeBusiness Digest29m in bond notes fail to stem cash crisis

29m in bond notes fail to stem cash crisis

BANK queues this week worsened as desperate depositors struggle to get cash for the festive holiday despite the injection of US$12 million in bond notes and the doubling of the cash withdrawal limit this week by the Reserve Bank of Zimbabwe (RBZ).

By Kudzai Kuwaza

Long winding queues could be seen outside various banks as public servants, including those employed in the army, battled to get their cash after being paid by government on Wednesday. Despite the gradual injection of US$29 million of bond notes into the market to ease the liquidity crunch since the November 28 last month, bank queues remain a constant feature with some depositors sleeping overnight outside banks in the hope of getting the elusive cash.

In a statement this week, the RBZ governor John Mangudya (pictured) announced that the central bank had injected an additional US$12 million in bond notes and had doubled the daily withdrawal limit of the surrogate currency to US$100.

“In view of this positive development and the need to ensure that the banking public is not continuously constrained by the lower withdrawal limits on bond notes of US$25 and US$50 per day, the bank has, with immediate effect, increased the daily bond note withdrawal limit to US$100 per day or US$300 per week for banks that have instituted weekly withdrawal limits. We trust that these measures will go a long way towards making [it] easy for the public to transact during the festive season,” Mangudya said in his statement.

Mangudya also admitted that the introduction of the bond notes would not eradicate the acute cash shortages.

“Against the background, bond notes shall fortuitously and subserviently go a long way to mitigate cash shortages within the economy. Clearing of cash queues at banks can never be an overnight event. It is a process.”

Lack of transparency by the central bank was evidenced by ambushing the market with US$1 bond coins and the failure by the central bank to set up an independent committee to oversee the circulation of bond notes as announced by Mangudya when he presented his monetary policy statement in September this year despite the surrogate currency being in circulation for nearly a month.

Despite launching bond notes which have unnerved the market, questions are swirling over the legality of the surrogate currency and the lack of a term sheet for the alleged US$200 million African Export and Import Bank (Afreximbank) facility.

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.

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