Zim to start using ‘token’ dollars next month

Zimbabweans fear new ‘bond notes’ equivalent to
the US dollar will bring a return of the
hyperinflation that wrecked the economy several
years ago. Photo: Jürgen Bätz / DPA
HARARE – Zimbabwe announced on Thursday that
“bond notes” equivalent to the US dollar would be
introduced in October, sparking fears of a return
to the hyperinflation that wrecked the economy
several years ago.
The country adopted the US dollar and South
African rand in 2009 after inflation — which
peaked at 231-million percent — rendered the
local dollar worthless.
But Zimbabwe has run out of US dollar notes in
recent months and hopes to ease the cash crunch
by printing its own “bond notes” that will be
valued in denominations of $2, $5, $10 and $20.
The plan has attracted criticism, with analysts
saying the token currency will not hold its US
dollar value and will be seen as a new version of
the valueless local dollar.
A wave of protests has shaken Mugabe’s regime
this year, with “No to bond notes” among the
regular slogans expressing grievances against
the government amid a worsening economic crisis.
“The bond notes will start to circulate by the end
of October and will be at par with the US dollar,”
Reserve Bank of Zimbabwe governor John
Mangudya said in Harare.
“We anticipate by the end of the year $7- million
will be in the market.”
The cash shortage has forced the government to
delay paying monthly salaries to civil servants
and the military.
With the government again able to produce its
own money, many Zimbabweans fear a repeat of
the excessive printing that led to hyperinflation.
“It will immediately destroy trust. The trust is
not there and the value of the bond note will not
be sustained,” Harare-based economist analyst
John Robertson told AFP.
“There is no money because there is no new
investment. There is no investment because there
is no trust — and you can’t fix that by printing
more notes.”
Zimbabwe once removed 12 zeros from its
battered currency, at the height of hyper-
inflation in 2009, when the largest note was the
$100-trillion denomination.
The new bond notes will be printed in Germany
and backed by a $200-million support facility
provided by Afreximbank (Africa Export-Import
Bank), the government has said.
Further anti-Mugabe protests are planned on
Saturday, despite a police ban on rallies in
Harare.
Mugabe, 92, has often used brutal force to
silence his opponents, and he warned the
protesters they were “playing a dangerous game”.
Last week, the government revealed that nearly
97 percent of its revenue goes to paying public
workers’ salaries.
Bond coins valued in US cents were introduced in
Zimbabwe in 2014 to tackle the problem of small
change.