Afreximbank US dollar facility never backed bond notes, Zim dollar: Mushayavanhu

LIVINGSTONE MARUFU

 

Dr. John Mushayavanhu, the new governor of the Reserve Bank of Zimbabwe (RBZ), astonishingly disclosed on Thursday that, contrary to earlier claims, the bond notes and the Zimbabwe dollar were never backed by the US dollar bond facility with Cairo headquartered African Export-Import Bank (Afreximbank).

This is a stark contrast to the assertions made  by Dr John Mangudya, the former governor of the RBZ, that the bond notes were backed by a US$200m Afreximbank facility.

 

Government, however, ditched the bond notes and coins in 2019 after re-introducing the Zimbabwe dollar.

 

But, President Emmerson Mnangagwa’s administration, last week replaced the Zimbabwe dollar with the new currency, the Zimbabwe Gold (ZiG).

 

Speaking at the Confederation of Zimbabwe Industries Monetary Policy Review Breakfast Meeting on Thursday, Dr Mushayavanhu asserted that ZiG is the currency of the future as it backed by foreign currency reserves, as well as gold and other precious metals.

 

“The bond note was never backed by anything,” Dr Mushayavanhu said.

 

He added: “We never had that policy where our local currency was backed. Therefore we did not maintain sufficient reserves to back the currency, we may have had a situation where sometimes the amount of money in circulation was higher than the amount of reserves held at the central bank. That is what we have corrected by the introduction of the structured currency (ZiG).”

 

Dr Mushayavanhu said as of April 5,  2024, the RBZ  had  foreign currency holdings totalling US$100m in cash and 2,522 kgs of gold worth US$185m to back ZiG.

 

He said ZiG circulating in the market is 80m, meaning its three times covered.

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