Prof Ncube rules out devaluation; claims Afreximbank US$ backing for RTGS/Bond Notes

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By Alois Vinga

FINANCE minister Mthuli Ncube says he has secured US$ backing for the country’s problematic RTGS and Bond Note balances, saying the development will ensure the electronic and surrogate currencies remain at par with the Green Back.

Financial analysts say that, presently, RTGS balances in the country’s banks stand at $9, 5 billion which are not backed by real money.

In a short statement posted on twitter from Bali, Indonesia on the sidelines of the International Monetary Fund and World Bank meetings, Prof Ncube confirmed the breakthrough deal.

“Today in Bali, Indonesia at the International Monetary Fund, World Bank Meetings, I had fruitful discussions with the President of Afreximbank Dr Oramah where Afreximbank has offered Zimbabwe a facility to guarantee 1:1 Convertibility of RTGS balances into US$ and availability of US$ for Nostro Foreign Currency Accounts,” he said.

“Government recognises concerns surrounding RTGS deposits, and we commit to preserve the value of these balances on the current rate of exchange of 1 to 1, in order to protect people’s savings.” was not able to establish the finer details on the facility.

Commenting on the development, economic analyst Dr Prosper Chitambara said he was not sure of Afreximank’s capacity to cover the huge amounts in RTGS and warned that moral panic could be triggered.

“The development might tempt Zimbabweans to transfer every cent they have into the RTGs account which may result in huge deposits that may not be covered by the facility but over and above this move provides a fallback position in managing the risk at hand,” he said.

Another analyst, Aeneas Chuma expressed skepticism over the development.

“We now await to see how the announcement is initiated because there will be need to deal with the problem by availing physical money in order to address the cash shortages,” he said.

The Reserve Bank of Zimbabwe (RBZ) introduced the bond notes in 2016, saying they were backed by a $200 million facility guaranteed by Afreximbank, although commentators have long existed doubt over the existence of that facility.

Economists say around $ 600 million worth bond notes are now in circulation. 

The minister insisted that the country would also continue using the multi-currency  system.

“In view of the need for an orderly currency reform programme that will be followed when the economic fundamentals are right to do, the country shall continue to use the multi-currency system which was put in place by Government in 2009,” he said.

“This system entails that foreign exchange earners are not prejudiced of their regulatory foreign exchange receipts and that those who do not earn foreign exchange have access to foreign exchange through the banking system as is per the current policy of foreign exchange management system.

“In parallel, the Reserve Bank shall continue to maintain adequate resources for the import of essential commodities.”