Zimbabwe's Mugabe vows to introduce bond notes despite criticism

Zimbabwean President Robert Mugabe said Thursday there is no going-back on introduction of bond notes despite strong resistance from the opposition.

Faced with a biting cash crunch since March, the Zimbabwe central bank has announced plans to introduce bond notes in October to ease the cash shortages and stem outflow of the U.S. dollar, the main currency in circulation after Zimbabwe adopted a basket of multi-currencies in 2009.

"So much criticism now has come, but it has been discussed with the industry and other institutions and we think those who are opposed to it are really either politically doing so or are doing so out of ignorance, but we know it can work really well," Mugabe said in an address to the Zanu-PF central committee.

The opposition MDC-T has condemned the planned introduction of the bond notes, saying they will trigger a black market for foreign currency as witnessed during the decade of economic crisis up to 2008.

Mugabe spoke as the International Monetary Fund said last week that it was assessing the impact of Zimbabwe's plans to introduce the notes, which will be backed by a 200 million U.S. dollar Africa-Export-Import Bank facility.

Calling them "surrogate currency", Mugabe said the notes would help stem externalization of the dollar, which he said had become a sought-after commodity by neighboring countries.

"The U.S. dollar has become a commodity. A well sought-after commodity by all manner of people from different nations who were or are venturing into our country to cream off little earnings denominated in United States dollars. We cannot allow the situation to continue like that," he said.

He said the "surrogate currency" would therefore help to stop "those crooks who were taking advantage of the availability of the United States dollar in the market to spirit it away".

Mugabe said the bond notes, which are viewed by many Zimbabweans as a ploy by government to reintroduce the moribund Zimbabwe dollar, would be the best cure to the cash challenges gripping the economy.

Zimbabwe in 2009 abandoned its hyperinflation ravaged local currency in favor of the U.S. dollar and eight other currencies to help stabilize the decade-old ravaged economy.

But in recent years, the U.S. dollar has become the dominating currency, placing more demand on the greenback at a time when the country's exports are negligibly low.

To deal with the bank note shortages, the central bank plans to introduce the bond notes and is also limiting bank withdrawals. It has said it will also now import smaller denominations of the U.S. dollar to discourage externalization as these are not popular with the people who move cash out of the country. Enditem