Bond notes not done deal: Govt

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The government has suggested that it may still be a while before it introduces the much-distrusted bond notes on the market — which are meant to mitigate Zimbabwe’s severe cash shortages — with the Reserve Bank of Zimbabwe (RBZ) revealing in court on Friday that the notes are only at a “planning stage

In its opposing papers to legal action against the bond notes that has been filed at the Constitutional Court by former vice president and now Zimbabwe People First (ZPF) leader, Joice Mujuru, the central bank said it also still needed to meet statutory requirements to back the use of the notes, whose introduction is targeted for October this year.

In her application seeking the declaration of the introduction of the bond notes as unconstitutional — which was filed through Hamunakwadi and Nyandoro Law Chambers — Mujuru cited President Robert Mugabe, Finance minister Patrick Chinamasa, the RBZ and its governor John Mangudya, and attorney general Prince Machaya as respondents.

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But responding to the lawsuit, Mangudya described Mujuru’s court application as both “premature and ill-founded”, adding, “Indeed bond notes, outside of a policy announced by Fourth respondent (RBZ), are still at planning stage …”.

“At no point has the (Reserve Bank) stated that bond notes are bank notes or indeed currency as defined in our laws, in particular the (Reserve) Act and the Bank Use Promotion Act (chapter 24:24).

“The entirety of applicant’s (Mujuru) action is premised on bond notes constituting bank notes and, or currency when in fact there is absolutely no basis for reaching this conclusion,” Mangudya added.

However, Mujuru still argued that bond notes were not provided for under the RBZ Act, adding that despite them being said to have the same value as the United States dollar, they were bound to depreciate in value.

“Further, a bond note cannot be the equivalent of any of the foreign currencies it will operate side-by-side with. Accordingly, the mandatory exchange of any foreign currency with a bond note is a prima facie deprivation of property rights.

“Money is property and a bond note, not being money, can never substitute money. There is therefore an infringement of the right protected by Section 71(2) of the Constitution to the extent that holders of foreign currency will be forced to use or hold bond notes in the place of their money,” she said.

“Whatever the respondents may seek to say about the bond note, it is clearly a disguised Zimbabwean dollar that is being introduced through the back door. The law does not allow a back door approach. If they wish to re-introduce the Zimbabwean dollar they must follow the law and call it by name given its demonetisation.

RBZ-Governor-Dr-John-Mangudya

 

In its opposing papers to legal action against the bond notes that has been filed at the Constitutional Court by former vice president and now Zimbabwe People First (ZPF) leader, Joice Mujuru, the central bank said it also still needed to meet statutory requirements to back the use of the notes, whose introduction is targeted for October this year.

In her application seeking the declaration of the introduction of the bond notes as unconstitutional — which was filed through Hamunakwadi and Nyandoro Law Chambers — Mujuru cited President Robert Mugabe, Finance minister Patrick Chinamasa, the RBZ and its governor John Mangudya, and attorney general Prince Machaya as respondents.

But responding to the lawsuit, Mangudya described Mujuru’s court application as both “premature and ill-founded”, adding, “Indeed bond notes, outside of a policy announced by Fourth respondent (RBZ), are still at planning stage …”.

“At no point has the (Reserve Bank) stated that bond notes are bank notes or indeed currency as defined in our laws, in particular the (Reserve) Act and the Bank Use Promotion Act (chapter 24:24).

“The entirety of applicant’s (Mujuru) action is premised on bond notes constituting bank notes and, or currency when in fact there is absolutely no basis for reaching this conclusion,” Mangudya added.

However, Mujuru still argued that bond notes were not provided for under the RBZ Act, adding that despite them being said to have the same value as the United States dollar, they were bound to depreciate in value.

“Further, a bond note cannot be the equivalent of any of the foreign currencies it will operate side-by-side with. Accordingly, the mandatory exchange of any foreign currency with a bond note is a prima facie deprivation of property rights.

“Money is property and a bond note, not being money, can never substitute money. There is therefore an infringement of the right protected by Section 71(2) of the Constitution to the extent that holders of foreign currency will be forced to use or hold bond notes in the place of their money,” she said.

“Whatever the respondents may seek to say about the bond note, it is clearly a disguised Zimbabwean dollar that is being introduced through the back door. The law does not allow a back door approach. If they wish to re-introduce the Zimbabwean dollar they must follow the law and call it by name given its demonetisation.

 

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