Zimbabwe to introduce local bank notes end-October – central bank

Zimbabwe abandoned its own currency due to hyperinflation in 2009.

The central bank’s Mangudya, sought to allay worries by saying the bond notes, to be initially circulated in $2 and $5 denominations, would account for less than one percent of the $6 billion held in bank deposits.

The country, led by President Robert Mugabe, adopted the United States dollar and South African rand in 2009 after inflation – which peaked at 231 million percent – rendered the local dollar worthless.

“The bond notes will be at par with the US dollar and will be used and treated in the same manner as bond coins”, said John Mangudya, the governor of the Reserve Bank of Zimbabwe.

Zimbabwe will start using the notes in October.

But activist leaders said the scheme would not answer their concerns and promised more rallies against economic hardships and the man they blame – 93-year-old President Robert Mugabe.

“The bond notes will start to circulate by the end of October and will be at par with the U.S. dollar”, John Mangudya, the governor of the Reserve Bank of Zimbabwe, said in the capital Harare. It said it expects $75 million worth of these notes to be in use by the end of the year.

“We anticipate by the end of the year $75m will be in the market”.

Mangudya said the fact that he had discussed the issue of bond notes with various stakeholders in the economy does not mean that he would fail to implement the right policy as there were few people so far who do not want the bond notes.

“It will immediately destroy trust”.

The country’s cash shortage has forced the government led by Mugabe’s ZANU-PF party to delay paying salaries each month to civil servants and the military. “There is no investment because there is no trust – and you can’t fix that by printing more notes”.

The central bank governor, John Mangudya, said the cash, known as bond notes, will be backed by $200 million support from the Africa Export-Import Bank.

The bank chief was unveiling his plans for the new local money, which many Zimbabweans think will return the country to the dark days of hyperinflation.