World Bank urges transparency over Zimbabwe's bond notes

The World Bank has called for transparency on the bond notes that Zimbabwe plans to introduce in October to address cash shortages that have hit the economy since the beginning of this year.

World Bank country manager for Zimbabwe Camille Nuamah told Xinhua Thursday that vibrant institutional arrangements and transparent accounting on how the notes in circulation are backed would be critical to the success of the bond notes.

"The bond notes appear to have some similar elements to those of currency boards in other economies," Nuamah said.

She said as such, how bond notes may be perceived by the public and the market is likely to depend, in part, on the institutional arrangements that will apply, and how these are communicated.

"Transparent accounting about how notes in circulation are backed would be a critical element of such arrangements," Nuamah said in an e-mailed response, adding that the bank was currently not involved in the design of these institutional arrangements.

The IMF has said it is assessing the impact of Zimbabwe's plans to introduce the notes which monetary authorities have said will be backed by a 200 million U.S. dollar Africa-Export-Import Bank (Afreximbank) facility.

The notes have largely been opposed by many Zimbabweans who fear the measure is a ploy by government to reintroduce the moribund Zimbabwe dollar, which was discarded by government in 2009 in favor of a basket of multi-currencies.

Pressure groups and opposition parties have in recent weeks held street protests in the capital Harare against the proposed local bank notes.

President Robert Mugabe, however, has vowed that there is no going back on the introduction of bond notes despite strong resistance from the opposition.

Calling them "surrogate currency", Mugabe has said the notes would help stem the outflow of the U.S. dollar which has become the main currency in circulation.

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 dominant currency, placing more demand on the greenback at a time when the country's exports are negligibly low. Enditem