Bond coins won’t exceed $50m: RBZ

Reserve Bank of Zimbabwe Governor Dr John Mangudya (right)  speaks to Institute of Chartered Accountants of Zimbabwe president Mr Bothwell Nyajeka (left) and chief executive Mr Matts Kunaka during a breakfast meeting held by the institute yesterday

Reserve Bank of Zimbabwe Governor Dr John Mangudya (right) speaks to Institute of Chartered Accountants of Zimbabwe president Mr Bothwell Nyajeka (left) and chief executive Mr Matts Kunaka during a breakfast meeting held by the institute yesterday

Business Reporter
The Reserve Bank of Zimbabwe said bond coins in circulation will not exceed $50 million for the next three years until economic fundamentals improve. The RBZ this year arranged a $50 million bond facility that was aimed at addressing coins shortage in the economy. RBZ Governor Dr John Mangudya told the Institute of Chartered Accountants CFO breakfast meeting yesterday that the $50 million backed bond coins at one percent of the total country’s deposits (currently sitting at $5 billion) are sufficient for the economy.

“Bond coins will not go beyond the $50 million facility and once economic fundamentals are in place the ratio will be maintained at one percent,” said Dr Mangudya.

“Through introduction of change in small denominations we are expecting to see self price corrections.”

He said the imported bond coins are not coming to increase liquidity but completing the United States dollar in smaller denominations.

Dr Mangudya said $10 million of bond coins has been disbursed and since last week banks have been receiving the coins. He said the bond coins issue has been a process which started in 2009 and was only manifesting today.

The coins are distributed in denominations of 1c, 5c, 10c and 25c, while the 50c coin will be introduced later next year.

On other hand he said banking sector stability will improve next year as the central bank is looking into various initiatives that restore confidence.

“We have been working on a one-on-one basis with the struggling banks and we are certain next year the sector will be stable,” he said.

Dr Mangudya said some sections have advocated for credit cards but only 20 percent of the population has access.

He said corporate governance deficit in the banking has become the greatest challenge affecting RBZ‘s efforts to restore confidence in the sector which remains the most fundamental to economic revival.

“Lack of good corporate governance in the financial services sector has remained a challenge to the central bank’s efforts.

“As a country we need to have a foundation for financial discipline because currently poor corporate governance is the order of the day. People should mourn more on how to stem bad corporate governance that concerning themselves on the issue of bond coins,” said Dr Mangudya.

He said Zimbabwe is a financially traumatised society and there is need for banks, public enterprises and private sector to practice good corporate governance for the economy to improve.

Optimal NPLs stand at five percent but the current average of about 20 percent is more than three times prudential levels.

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