NOTES OF CONCERN
The game is bonds: Zim bonds
The prospect of inflation in Zimbabwe has increased, even though the country’s central bank has resisted the temptation to print money recklessly
The introduction last year of bond notes, which the Reserve Bank of Zimbabwe claims have a par value to the US dollar, has helped the bank regain core monetary policy functions such as printing currency and influencing the direction of interest rates. When the country dropped the Zimbabwean dollar in favour of multiple currencies to end hyperinflation in 2009, then governor Gideon Gono’s role shrank. At the time, that came as a relief because of Gono’s tendency to print money at a furious pace. Economists say the newfound monetary power of John Mangudya — who replaced Gono in 2014 — is nothing to worry about should he exercise restraint; but others are sceptical. So far, Mangudya appears to be managing the amount of bond notes in circulation well. The central bank claims bond notes are backed by a US$200m Afreximbank facility, which limits its ability to print beyond that. However, inflation is another matter. The country’s inflation rate broke into positive territory for the first ...
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