By Michael Gwarisa
IT’S barely three months after the Reserve Bank of Zimbabwe (RBZ) introduced the surrogate currency, or funny money as many might want to call it in the form of bond notes.
Although the money has been hugely accepted as a medium of exchange across the economy, the sight at most financial institutions is one that clearly tells a tale of a currency that has failed to solve the woes that bedeviled depositors before the introduction of bond notes.
Long winding queues and hungry depositors sleeping in banking halls and pavements have become order of the day. As if the misery depositors are going through is not enough, more banks even those of foreign origin have slashed withdrawal limits to sorry levels in a bid manage the outflow of cash which is already in short supply, a situation that has worsened lives of depositors.
Just before Christmas, the apex bank injected an additional US$12 million bond notes to the US$10 million worth of bond notes it first introduced on November 28 in an effort to ease the cash crunch during the festive season. The central bank also doubled the withdrawal limit of bond notes to US$100 while most banks especially those of foreign origin like Barclays pegged the weekly withdrawal limit of bond notes to US$250.
According to the RBZ, US$88 million worth of the surrogate currency has been released into circulation to date, meaning only US$112 million is yet to hit the market.
Renowned economist Ashok Charkravat recently highlighted that Zimbabwe needs not less than US$ 1 billion to avert the prevailing cash crisis. This means Zimbabwe will still have an US$800 million cash deficit even after the the RBZ would have exhausted its US$200 million bond note facility.
Under such a quagmire, the RBZ has no choice but to do the unthinkable i.e Printing More Bond Notes so as to protect depositors against the prevailing cash problem.
It appears every effort the central bank makes towards mitigating the cash challenges, the economy throws it right back into Mangudya’s face despite his intentions being noble.
Zimbabwe is already on a fast track trajectory back to the 2008 scenario where hyperinflation and empty supermarket shelves became a normal scene. The central bank chief is slowly running out of options. He is a troubled soul trying to patch up an old torn wine-skin.
The biggest challenge Zimbabwe faces at the moment is its highly informalised economy where almost 90 percent of business is being conducted in the dark and money is not trickling back to the formal sector. When bond notes were introduced, the central bank was convinced that the funny money would easily find its way back into the formal sector and banking channels.
Shockingly, the new notes have also vanished into oblivion, leaving banks with no option but to slash withdrawal limits to some sorry levels.
The irony of the whole issue is that the notes are less than four months into circulation and already they are disappearing like fairy dust.
What other choice does Mangudya have under the prevailing scenario than to go down the route of his predecessor Dr Gideon Gono whose penchant for slashing zeros was unmatched.
As elections draw closer, political parties will soon need funding their campaigns and unfortunately or fortunately, our government is broke, it cant even pay its civil servants on time. How exactly is treasury going to fund the pre-election campaign period.
It has also become clear that Chinamasa does not have the power to stop the payment of civil servants bonuses. Judging by previous events, the President has been the idea of denying public service workers the 13th cheque which means come end of year, civil servants will be getting their bonuses. But the question is from where will they be getting their bonuses?
Obviously our US$, Rand and Bond Note reserves cant meet the above demands unless something happens.
Its only a matter of time before Mangudya announces intentions to print more money, like we always do, lets wait and see how this unfolds.