‘Bond notes temporary’

Business Reporter—

THE Reserve Bank of Zimbabwe Governor Dr John Mangudya says internal devaluation, a process of cutting wages and other costs, will succeed the bond notes export incentive measure.He said bond notes are a temporary measure and the RBZ will not go beyond the $200 million Afreximbank facility once it runs out.

The bond notes, expected to be released before the end of this month, are being introduced as an export incentive and are backed by a $200 million Afreximbank facility.

One of their key functions is to help ease the banknote shortages prevailing in the economy.

Speaking on the sidelines of the Confederation of Zimbabwe Industries 2016 manufacturing sector survey report launch in the capital, Dr Mangudya said stakeholder discussions would be held to reach a consensus on implementation of the internal devaluation.

Internal devaluation is an economic and social policy option aimed at restoring the international competitiveness of a country.

This mainly involves reducing labour costs, either wages or indirect cost of employers.

“Internal devaluation here is very simple; it simply means looking at how we can remain competitive, so we say how do we ensure the export incentive remains sustainable.

”We think the route to take is internal devaluation as successor for the bond notes.

“Starting from now up to the time it is exhausted, we need to have mechanisms to hold this incentive,” Dr Mangudya said.

In line with this, a committee made up of both public and private sector representatives is already in place on the best possible implementation of the process.

“We need to have more discourse with ourselves, the media, Government, the Zimbabwe National Chamber of Commerce, Confederation of Zimbabwe Industries and other stakeholders to see how best we can implement this,” said Dr Mangudya.