Zimbabwe to adopt Chinese currency to boost confidence in banking sector
By Nelson Bhebhe - 2 September 2018
ZIMBABWE is lobbying to be included among African offshore clearing centres for the Chinese currency, the renminbi (RMB), as it seeks to grow trade between the two countries and boost confidence in the local banking sector, a top diplomat has said.
The RMB was added to the IMF’s basket of currencies two years ago, meaning it is now a reserve currency that can be used as a unit of exchange in international trade and international cross-border transactional settlements.
Presently, the UK is the world’s largest clearing centre for the RMB outside Greater China, followed by Singapore.
Zimbabwe hopes to reach an agreement with Beijing on the offshore centre during the 2018 Forum on China-Africa Co-operation that officially opens tomorrow. This year’s edition of the triennial summit will be co-chaired by host President Xi Jinping and South Africa’s President Cyril Ramaphosa.
Zimbabwe’s Ambassador to China Mr Paul Chikawa told our Harare Bureau last week that Harare was also pursuing opportunities in e-payments, telecommunications, infrastructure, and power transmission and distribution. Zimbabwe is also angling for a market for its agricultural produce.
Ambassador Chikawa said: “If all goes well, we will be so keen to be one of the centres in Africa, if not the leading centre, to have an offshore Renminbi Centre. You know, Hong Kong — which is part of China — is; Singapore is; London is. That means it is a reserve currency in its own right.
“So, if we are able to fashion out an agreement in the area of banking, and we are hopeful that our own (Reserve Bank of Zimbabwe) Governor (Dr John Mangudya) — though he is not part of Focac — could find space and time to come here.
“We are pursuing certain interests, very formative stages to introduce the e-payment system as a part of dealing with the liquidity situation and also growing with the times. This is part of the vision, part of the dream, but it’s a lot bigger.”
President Emmerson Mnangagwa is in China for Focac 2018, and his delegation expects to conclude bilateral agreement in several projects at Focac.
“There was the mention of the NetOne Phase Three project, which is between our NetOne and Huawei . . . The NetOne Phase Three expansion project is going through some necessary paperwork before it is implemented. It’s going to be in two or three phases.
“Related to power generation, in March, President Mnangagwa commissioned the completion of Kariba South power extension, which added 300MW. So, you see, we are now producing additional power. So, logically and necessarily, you want to attend to your power transmission and distribution aspect of the whole power equation.
So one area that we will be hoping to quickly resolve this time around is support from our Chinese partners to make sure that the transmission and distribution aspect of the power has been dealt with. In other words, we are saying we have a partner that we are working with to quickly implement the transmission and distribution of the power; otherwise, the power generated will go to waste,” Ambassador Chikawa said.
The 7th Ministerial Conference of Focac — a platform of engagement between China and Africa on economic, social and political issues — runs from September 3 to September 4.
At the last Summit held in Johannesburg, South Africa in 2015, China pledged $60 billion in loans to Africa. Beijing has funded the expansion of Kariba South Power Station and Victoria Falls Airport, which has been completed. The $1,5 billion expansion of Hwange Thermal Power Station is underway. source
President Donald J. Trump Signs S. 2779 into Law
On Wednesday, August 8, 2018, the President signed into law:
S. 2779, the “Zimbabwe Democracy and Economic Recovery Amendment Act of 2018,” which amends the Zimbabwe Democracy and Economic Recovery Act of 2001.
April 17, 2018 Zimbabwe in tight timeline to repay arrears, seek more funding
Zimbabwe stuck on Monday to its plan to clear its debt arrears by September with the aim to tap international capital markets by the end of the year, though that timeline would be “very fast-tracked.” Zimbabwean officials met with investors in New York in search for cash that would clear about $1.8 billion in arrears with the World Bank and the African Development Bank. Repayment would unlock more cash from the ADB and is necessary to tap other sources of development financing.
“We need to clear the ADB and World Bank before we’re able to go into a program with the IMF,” said John Mangudya, governor of the Reserve Bank of Zimbabwe, at a press event following the investors’ meeting. “What we need is a bridge financing from the likes of these investors,” he said. In 2016, Zimbabwe paid off 15 years’ worth of arrears to the International Monetary Fund. The timeline for the arrears payment and the added funding “is possible, but it would be very fast-tracked,” said Dean Tyler, head of fixed income at Exotix Capital, which hosted the meeting.
Some 40 to 50 international investors, institutions and hedge funds among them, attended the meeting, according to Tyler, and it follows a similar meeting in London last month. The pitch to investors comes shortly after Robert Mugabe, Zimbabwe’s president for nearly 30 years, was forced to resign following a de facto army coup last November.
Zimbabwe became a pariah in the West after Mugabe’s government was accused of rigging votes and abusing human rights, and over the years it has turned to China for investment to help an economy desperate for new infrastructure. Source
‘Bond notes to stay’
Bond notes will remain in circulation until Zimbabwe introduces its own currency, Finance and Economic Planning Minister Patrick Chinamasa has said. Responding to questions on the fate of the bond notes after media reports claimed they will be phased out, Minister Chinamasa said the introduction of a local currency will mark the end of bond notes.
“Nowhere did the Deputy Minister (of Finance and Economic Planning Terrence Mukupe) say the bond notes are going to go away and that is the sort of negativity that is not going to get us anywhere,” Minister Chinamasa said at a breakfast meeting in Harare yesterday. It’s not true; bond notes will stay until we have our own currency and the Governor (of the Zimbabwe Reserve Bank of Zimbabwe) and myself have been at pains to spell out the macroeconomic fundamentals that we need to put right before we can do that.
“We need to address the budget deficit; we need to address the issues of exports and we need to build foreign currency reserves of at least three months, at the moment we are at 0,7 months,” the Minister added. Minister Chinamasa said the country needs to boost production.
“This is why we are coming up with all these proposals or incentives to incentivise production so I just want to plead with you, please let’s look at the positive side, let’s not dwell on the negative, let’s not be driven by some of the falsehoods that are peddled through social media. You are intelligent enough to distinguish between an obvious falsehood and that which may have credibility,” he said. Minister Chinamasa said Government was working on a cocktail of measures to improve the economy.
For instance, Government has more than doubled export incentives for tobacco producers to 12.5 percent, from 5 percent. Gold producers will also be prioritised in the export incentives. Gold and tobacco, Chinamasa said, contribute 86 percent of export receipts.
Minister Chinamasa said Government is also cutting down on expenditure to reduce fiscal deficit. Government is also rationalising expenditure on wages and at the same time grow the economy to ensure recurrent expenditure finds its right proportion within a bigger cake. Minister Chinamasa said Government is normalising relations with the United Kingdom, The European Union and the United States. The key, he said, is normalising relations with the United Kingdom.
Moreover, an investor friendly environment is being created. The huge RTGS balances, Minister Chinamasa said, are going to be used for infrastructure development and to fund the production. Minister Chinamasa also commented on the country’s arrears clearance plan which he said is still on course. source
Zim finance minister says 'bond notes aren't going anywhere'
Harare – Zimbabwe's
finance minister Patrick Chinamasa has reportedly denied reports that the country's surrogate currency - the bond motes - would be phased out soon.
The state-owned Herald newspaper quoted Chinamasa as saying that the controversial bond notes were not going anywhere until the southern African country had its own currency.
The minister said that there were macroeconomic fundamentals that the treasury was working on before the surrogate currency could be discontinued.
"We need to address the budget deficit, we need to address the issues of exports and we need to build foreign currency reserves of at least three months, at the moment we are at 0.7 months. This is why we are coming up with all these proposal or incentives to incentivise production so I just want to plead with you, please let’s look at the positive side, let’s not dwell on the negative, let’s not be driven by falsehoods that are peddled through social media. You are intelligent enough to distinguish between an obvious falsehood and that which may have credibility," Chinamasa was quoted as saying.
The southern African country adopted the use of multiple currencies in 2009 after its currency had been rendered worthless by hyperinflation.
The US dollar had been the main transacting currency but it has been in short supply since 2015 due to low exports and externalization.
This led to the introduction of a surrogate currency in November 2016 to ease chronic shortages of US dollars, and to encourage exporters who earn the country foreign currency. source
100 Trillion Zimbabwe Dollars (Currency)
If you ever wondered what Zimbabwean One Hundred Trillion Dollars look like, you have come to the right place. Zimbabwe experienced a period of hyperinflation spanning a few decades that culminated in 2008 with the introduction of the 100,000,000,000,000 banknote! Currency in Zimbabwe was so devalued that you needed a big stack of high denomination bills to buy a loaf of bread! Only a few million copies of the banknote were ever produced up until 2009.
However Truth is the Zim Currency is not really used in their country and is currently worthless. They practically give it away in Zimbabwe.
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