Will Bond Notes Not Cause Inflation

Bond notes will not cause inflation and parallel markets because the amount in circulation would be small and limited by the size of the facility which is capped at US$200 million.

It is also important to note that the current fundamentals are different from those of the period of hyperinflation of 2008.

During that period, domestic production was almost non-existent and any new money that was injected into the economy became inflationary.

At their maximum of US$200 million as dictated by the Facility, Bond notes would only constitute 4% of the total banking sector deposit base.

This measure is a very important step in stabilising the economy and to safeguard against externalisation and capital flight.

Under the multi-currency system, which the country will continue operating, the level of inflation has generally remained low, averaging -0.2% in 2014, -2.4% in 2015 and currently at -2.5% as at March 2016.

Unlike in prior years, the Bond notes will circulate with other multiple currencies.

Zimbabweans should take note of the fact that the current export incentive/bonus scheme is aimed at increasing domestic production for exports, thereby increasing the country’s export earnings which liquefy the multi-currency system and therefore it would not be inflationary.

For more visit http://www.rbz.co.zw/assets/notice-on-export-bonus-scheme-which-is-supported-by-bond-notes.