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New cash notes for Zimbabwe

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Bond notes have no value outside Zimbabwe

John Mangudya Governor of Reserve Bank of Zimbabwe

Zimbabwe would print a further $300m of its latest currency known as Bond Notes, central bank governor John Mangudya has said. 
He said this tranche of cash notes would be backed by Afrexim bank, bringing Zimbabwe’s debt for cash to the Cairo-based bank to $550m.

Zimbabwe is chronically short of cash and foreign currency for imports.

Mangudya made this announcement in in a monetary policy statement on Wednesday. He said Zimbabwe was looking for a further $600 million loan from Afrexim bank to boost cash held in nostro accounts of commercial banks.

Mangudya linked introduction of bond notes in November last year to a five percent bonus for exporters. He said this had boosted foreign earnings by more then 14 percent.

“Building on the success on the export incentive scheme in securing exports of goods and services and diaspora remittances, the bank found it imperative to increase the scheme by a further $300 million dollars under a standby liquidity support facility which is being finalized by the Afrexim bank,” Mangudya said.

He is at pains to insist that he and the central bank is not printing money in an uncontrolled way as happened prior to 2008 when the Zimbabwe dollar collapsed under hyperinflation. Zimbabwe then adopted several foreign cash notes including the Rand. Today most Zimbabweans choose to use the US dollar.

There is a growing black market for US dollar cash notes against debit cards and electronic transfers. Bond Notes have no value outside Zimbabwe, but there is a swift trade in them in border towns like Musina.