- Central bank will start with small denominations: governor
- Governor Mangudya pledges to clear foreign debt arrears
Zimbabwe will start circulating $75 million in so-called bond notes this year, beginning with denominations worth between $1 and $5, central bank Governor John Mangudya said.
An earlier announcement of plans to introduce the notes has sparked riots in Harare, the capital, on concern the nation will return to hyperinflation, which reached 500 billion percent in 2008, according to the International Monetary Fund. Zimbabwe abandoned its currency in 2009 and allowed the use of currencies including the U.S. dollar, the South African rand and the euro.
“In order to minimize the lack of confidence in the notes, we’ll start by introducing them in low denominations,” Mangudya told reporters in the capital, Harare, Thursday. The notes will hold a value equivalent to the dollar, he said.
Zimbabwe has been gripped by a liquidity crisis that’s forced the government to pay its workers late in recent months. Issuing the bond notes is an attempt to counter the cash shortage. Finance Minister Patrick Chinamasa said on Sept. 9 that the state may not be able to meet its civil service pay obligations later this year. The southern African nation owes lenders including the IMF, World Bank and Africa Development Bank about $9 billion, according to the finance ministry.
“It’s imperative that we re-engage with our lenders, that we fast track re-engagement, because it’s suicide not to clear our arrears,” Mangudya said.