(Xinhua) -- Zimbabwe’s central bank on
Thursday vowed to introduce local bond notes at the end of
October despite public concern, arguing the measure is necessary
to ease a cash shortage and boost foreign exchange inflows into
The central bank proposed to pay an export
bonus of up to 5 percent to exporters through bond notes in May
in order to boost foreign currency inflows and address current
However, there is concern the introduction of the bond notes
is an attempt by the government to bring back the moribund
Zimbabwe dollar through the back door.
Opposition parties have in recent weeks staged protests
against the introduction of the bond notes which are backed by a
200 million U.S. dollar African Export-Import Bank (Afreximbank)
Presenting its 2016 mid-term monetary policy statement,
Reserve Bank of Zimbabwe Governor John Mangudya said the bond
notes, to be at par with the U.S. dollar, did not mark the
return of the Zimbabwe dollar because macro-economic
fundamentals for the return of the local currency were not yet
"The bank has heard and taken note of the public’s concerns,
fear, anxiety and skepticism of bond notes," Mangudya said.
"The bank is addressing the concerns by planning to introduce
smaller denominations of bond notes of 2 U.S. dollars and 5 U.S.
dollars," he explained.
In addition, the bank would set up an independent board to
have oversight role of the issuance of the bond notes in the
economy, he added.
The central bank governor said bond notes equivalent to about
75 million U.S. dollars would be circulating in the economy by
the end of December 2016, while the ceiling of the 200 million
dollar Afreximbank facility would be attained when total exports
reach 6 billion dollars.
"The bond notes will be gradually released into the economy
in sympathy with export receipts through normal baking
channels," he said.
Zimbabwe abandoned its hyperinflation ravaged local currency
in 2009 when the largest note was the 100 trillion denomination
in favor of the U.S. dollar and eight other currencies that
include the South African Rand, British Pound, Euro, Chinese
Yuan, Japanese Yen and Australian dollar.
However, the U.S. dollar has become the main circulating
currency and it too has become scarce, with the government
blaming externalization and low exports for the shortage of the
IMF says no financing
talks with Zimbabwe before arrears clearance
HARARE Zimbabwe (Xinhua) --
The International Monetary Fund
(IMF) has said it is not discussing any financing program with
Zimbabwe, which is pursuing a debt clearance plan with
international financial institutions.
Zimbabwe in May hammered a plan to clear 1.8 billion U.S.
dollars arrears to the IMF, World Bank and the African
Development Bank (AFDB) to unlock fresh capital from the
multilateral creditors, which suspended loans to the country at
the turn of the century after it started defaulting.
Reserve Bank of Zimbabwe Governor John Mangudya said Thursday
significant progress had been made and that Zimbabwe was on
track to clear the arrears by December 31, 2016.
Responding to a question during a press beefing in Washington
Thursday, the IMF director of communications and spokesman Gerry
Rice said talks on financing could only start after Zimbabwe
clears its arrears.
"I want to repeat that there’s no financing program under
discussion with Zimbabwe at this point. Indeed, the authorities
have announced a plan to clear the arrears. Once they are
cleared, which they are not at this point, our board would need
to discuss that," Rice said in a transcript of the press
briefing seen by Xinhua Friday.
In April, Zimbabwe Finance Minister Patrick Chinamasa said
the southern African country was preparing a financing program
in anticipation of new funding from the creditors once it clears
The country has proposed to use several funding mechanisms to
clear the arrears.
These include utilization of the country’s special drawing
rights from the IMF to repay 110 million dollars to the IMF,
utilization of a bridge loan of 819 million dollars arranged by
the African Export-Import Bank to repay 601 million dollars to
the AFDB, and 218 million dollars to the World Bank’s
International Development Association.
Zimbabwe would also utilize a long-term loan from a bilateral
lender to repay the International Bank of Reconstruction and
Development debt arrears amounting to 896 million dollars.
Zimbabwe cabinet rejects
proposal to cut salary for civil servants
HARARE Zimbabwe (Xinhua) --
Zimbabwe’s cabinet has rejected a proposal
by finance minister to cut salaries and bonuses for civil
servants as part of measures to contain a ballooning public
sector wage bill gobbling 97 percent of state revenues.
Information Minister Christopher Mushowe said Wednesday the
cabinet rejected the proposal in July and that Finance Minister
Patrick Chinamasa disregarded this when he announced the
measures while presenting the mid-term budget speech in
parliament last week.
Among other measures, Chinamasa proposed a reduction in
salaries and allowances for civil servants, taxation of
allowances, suspension of bonuses for two years and retrenchment
of 25,000 civil servants as part of cost-cutting measures to
revitalize the economy.
Chinamasa also proposed to cut the number of embassies and
consulates, a reduction in foreign allowances and to review
class travel arrangements for senior government officials
including ministers and legislators.
"The President and cabinet want to assure the civil servants,
farmers and the public at large that these proposed measures are
not friendly operative," Mushowe said.
Mushohwe said it was expected that the clarification would
put to rest anxieties that may have arisen within the civil
service, farming community and public at large.
Chinamasa warned that government could soon fail to raise
enough money to pay salaries to its workers if urgent measures
are not put in place to arrest ballooning expenditure.
According to Chinamasa, the measures were expected to reduce
employment costs to around 60 percent of total revenue by 2019
from the current 97 percent.
Zimbabwe’s government is operating in a tight fiscal space
marked by dwindling revenue inflows.
Economic growth forecast for 2016 has been cut to 1.2 percent
from the initial 2.7 percent due to poor performance in
agriculture, the mainstay of the economy.
Grumblings in civil
service as Zimbabwe moves to cut jobs and remuneration
HARARE Zimbabwe (Xinhua) --
Representatives of Zimbabwean civil servants will
meet Wednesday to discuss the government’s announcement that it
would cut jobs and tax the allowances of those in lower grades
starting Oct. 1.
Finance and Economic Development Minister Patrick Chinamasa,
in announcing the mid-term fiscal policy statement last week,
said the taxing of allowances, together with reduction of
workers by 25,000, would unlock more revenue for the
Chinamasa also announced the suspension of bonuses for 2016
and 2017, a move which civil servants will most likely find
untenable because of their already low salaries.
Ministers and their deputies and more senior employers will
also have to endure salary and allowances cuts of between 5 and
The minister said Cabinet had approved wage bill
rationalization, which would reduce baseline public employment
costs by around 118 million U.S. dollars by end of year.
Employment costs took 1.64 billion U.S. dollars—or 96.8
percent of revenue—during the first six months of the year.
A health worker who refused to be named said the taxing of
allowances would hurt many people because they were not earning
enough to sustain decent standards of living.
"Taxing our allowances is one and the same thing with
reducing our salaries because our take-home will be lower," he
President of the Zimbabwe Teachers Association Richard
Gundane told state-run newspaper Herald that the general
sentiment among workers was that the government decision was
"We have to make it clear to the government that we’re not
accepting their decision to cut jobs, salaries and allowances
for civil servants," he said.
Economist Clemence Machadu described the government’s
decision as a prescription for slimming to death.
"The common thinking is that by cutting civil servants’
salaries and allowances by up to 20 percent and forgoing bonuses
up to 2017, Government would save money."
"But the truth of the matter is that anything that tampers
with the worker’s spending power, tampers with demand too,
eventually tampering with production.
"It’s naive austerity," he told Xinhua.
He added that the action would further discourage the already
low employee productivity and morale, and invite more
demonstrations on top of the ones that had taken place in recent
Chinamasa is literally caught between a rock and a hard place
and has to juggle between a huge labor force of 298,000 chewing
up 96.8 percent of revenue and freeing more funds for social and
infrastructure development against an underperforming economy.
Revenue projection to end of year has now been revised
downwards from 3.85 billion dollars to 3.755 billion because of
low revenue inflows.
The revenues underperformed by about 183.7 million dollars
while expenditures were about 308.4 million between January and
Chinamasa said forgoing bonuses for the next two years would
release 180 million dollars which would be used to alleviate the
effects of the current devastating drought.
But Machadu said this was not good enough because the poorly
paid civil servants would suffer more.
"But how do you solve drought by cutting an income of an
average person, and are we going to have drought in 2017, since
the 2017 bonus has also been forgone?"
While the ministers would also experience salary cuts,
Machadu said more should have been done to make them spend less,
including revising the type of motor vehicles they used.
He said he feared that some senior civil servants and
ministers—now left without bonuses and with reduced salaries and
allowances which are now being taxed as well—might lunge at
government enterprises under their purview and siphon funds from
Zimbabwe police issue new
ban on public protests in capital
HARARE Zimbabwe (Xinhua) --
Zimbabwean police have issued a new ban on public
demonstrations in capital Harare for a month after their recent
ban was declared invalid by the High Court.
Officer Commanding Harare Central District Chief
Superintendent Newbert Saunyama issued the prohibition order
The ban runs from Sept. 16 to October 15, 2016.
The new ban comes after the High Court last week declared
invalid a two-week ban on public protests by police, arguing
that it was unconstitutional and violated citizens’ rights.
Police had issued the ban following violent clashes between
police and demonstrators last month.
The court challenge was mounted by opposition political
parties working under the banner of National Electoral Reform
Agenda who have previously organized anti-government protests to
push for electoral reforms before the 2018 elections.