November 28, 2016
HARARE, Zimbabwe (AP) — Zimbabwe has issued its own currency for the first time since 2009 to try to ease biting shortages of the U.S dollar. Banks started issuing the new currency, called bond notes, Monday. Previously the U.S currency had been Zimbabwe’s main medium of trade.
The new bond notes sparked a mix of hope and apprehension among a population desperate for a solution to the cash crisis but also skeptical of the ability of President Robert Mugabe’s government to manage a currency.
In 2008 and 2009 the state’s central bank printed so much of its currency, the Zimbabwe dollar, that the country experienced mind-boggling hyperinflation that reached 500 billion percent, according to the International Monetary Fund. People’s savings and pensions were wiped out. The inflation was only brought under control when the government abandoned the Zimbabwe currency and began using the U.S. dollar and several other foreign currencies as legal tender.
But this year the government has not had enough U.S. dollars to make timely payment of the salaries of civil servants, police and army. Banks have been so short of the U.S. currency that people have slept outside branches in the hope of getting a few dollars. Monday the banks began issuing people with bond notes.
“I am happy that I have finally got some cash after days of sleeping in a bank queue,” said Tenson Tigere, a Harare man who received a combination of bond notes and U.S. dollars from his bank. “At the same time I am not sure that these bond notes are the solution. They might soon become worthless just like the Zimdollar,” he said outside a major bank in Harare after he was given $40 in bond notes and $10 in greenbacks.
The central bank, The Reserve Bank of Zimbabwe, said the new notes will come in $2 and $5 denominations, although only $2 notes are being issued Monday. The Reserve Bank has also introduced $1 bond coins.
The currency is pegged at par with the U.S. dollar and is backed by a $200 million bond facility with Afreximbank, said the Reserve Bank in a statement Saturday. Some vendors readily accepted the new currency but said they are cautious and will stop if the notes begin to lose value.
Harare-based economic consultant John Robertson said the introduction of bond notes could lead to shortages of commodities and price hikes. “Anyone who needs foreign currency for imports will have to go to the black market. Inevitably the bond notes will lose their value,” he said. “It is back to the Zimbabwe dollar scenario.”