IMF says surrogate currency will not solve Zimbabwe’s economic problems

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A Zimbabwean man shows off new bond notes outside a bank in Harare on November 28, 2016. Picture: Philimon Bulawayo/Reuters
A Zimbabwean man shows off new bond notes outside a bank in Harare on November 28, 2016. Picture: Philimon Bulawayo/Reuters
A Zimbabwean man shows off new bond notes outside a bank in Harare on November 28, 2016. Picture: Philimon Bulawayo/Reuters

Zimbabwe’s “bond note” surrogate currency will not solve its economic problems, the International Monetary Fund said.

The southern African nation last year introduced bond notes, which officially trade at par with the U.S. dollar and are backed by a $200 million bond from the African Export and Import Bank.

The director of the IMF’s Africa department, Abebe Aemro Selassie, told reporters in Washington on Sunday that limited foreign exchange inflows and a lack of monetary policy tools since Zimbabwe’s adoption of the U.S. dollar in 2009 had worsened cash shortages, Reuters reports.

Selassie said that important for Zimbabwe to have a more comprehensive policy package which also addresses a lot of the fiscal challenges that the country faces, a lot of the structural reforms that have to be done.

The central bank says it has so far printed $121 million in bond notes but a high demand for cash has meant that the surrogate currency is also in short supply, the report says.

Importers, including mining companies and manufacturers, say they are facing serious delays in paying for imports because banks have no dollars to make the payments.

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