Zimbabwe’s main opposition party Movement for Democratic Change (MDC) has come out with guns blazing following the announcement by the Zimbabwean government that it will introduce bond notes that are on par with the U.S. dollar in an effort to curb the current shortage of cash in the country.
Speaking to the media (News24), opposition leader Morgan Tsvangirai termed the move to introduce U.S. dollar bond notes as “madness,” saying Zimbabweans have walked the same road before:
“The so-called bond notes, with a value of up to $20, signify a return to the stressing national times of eight years ago,” Tsvangirai said.
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What’s the Effect?
MDC claims that the introduction of bond notes will drive the country’s economy to its knees, citing the 2009 crisis when Zimbabwe experienced one of the worst inflation rates in the world. Hyperinflation peaked at 231 million percent and rendered the local currency worthless, forcing Zimbabwe to adopt U.S. and South African currencies.
The government’s announcement last week has caused panic in Zimbabwe as evidenced by the long queues at banks and ATMs as depositors rush to withdraw their money. This massive withdrawal is expected to negatively affect banks since daily withdrawals are higher than deposits.
Still, Reserve Bank of Zimbabwe Governor John Mangudya hinted last week that the government plans to limit bank withdrawals to $1,000 per day in what is seen as an attempt to cushion banks against massive withdrawals.
According to the opposition, the plan to introduce bond notes will take Zimbabweans back to the dark days when they were poor “quintillionnares.”
The opposition also fears that the new development might cause ordinary citizens, such as pensioners, to lose their savings as the local currency will be rendered worthless.
Former Zimbabwe’s Finance Minister-turned-opposition leader Tendai Biti also warned that the introduction of bond notes spells doom for the country’s already fragile economy.
“Until such a time the RBZ [Reserve Bank of Zimbabwe] assures the nation that our money will not be wiped out as happened in 2008, we will not encourage our members to use banking facilities because we know that our hard-earned cash would be reduced to nothing,” Tendai said.
But the RBZ governor assured parliamentarians on Monday that the apex bank had imported $15 million to tackle the current cash shortage in Zimbabwe.
The opposition now threatens to call for countrywide protests against “this ill-advised decision,” insisting that the plan is not backed by any economic logic.