Zimbabwe to roll out derided ‘bond notes’ on Monday

Zimbabwe will issue “bond notes” equivalent to the US dollar from next week to ease critical cash shortages, the central bank announced Saturday, despite widespread public fear of a return to hyperinflation.

“The Reserve Bank of Zimbabwe is pleased to advise the nation of the introduction of bond notes with effect from Monday,” the bank said in a statement.

The southern African country has used the US dollar since 2009 after a rate of inflation that peaked at 500 billion percent rendered the Zimbabwe dollar unusable.

But the country has in recent months experienced a severe shortage of US dollar banknotes forcing authorities to print what locals have dubbed “surrogate money”.

“The initial release of bond notes shall be in an amount of $10 million (9.5 million euros) in denominations of $2 and $2 million in $1 bond notes,” the central bank said in a statement.

Depositors will be allowed to withdraw a maximum of $50 worth of bond notes per day and $150 a week.

The 2009 switch to foreign currencies saw relative economic stability before the economy began to falter again as government policies deterred investors.

The economic decline has worsened in recent months with banks running short of cash forcing desperate depositors to sleep overnight outside branches to be sure of accessing their money.

Those businesses that have weathered Zimbabwe’s successive economic storms are grinding to a halt as the government repeatedly fails to pay soldiers and civil servants on time.

Cash shortages prompted the authorities to impose limits on withdrawals and the amounts that travellers can carry when leaving the country.

The new notes which authorities said would ease cash shortages were meant to be rolled out in October.

The announcement earlier this year of plans to introduce bond notes prompted panic withdrawals and sparked protests by those fearing a return to hyperinflation when hundreds of thousands lost their savings and shops were left empty.

Last week several activists were beaten up and arrested ahead of a planned street protest to oppose the introduction of the notes.

The government said the new notes will be backed by a $200 million support facility provided by the Cairo-based Afreximbank (Africa Export-Import Bank).