Prosper Ndlovu and Oliver Kazunga, Business Reporters
DEPOSITORS will be able to withdraw up to $1 000 weekly starting next Tuesday, the same day when new $10 notes will be introduced into circulation, the Reserve Bank of Zimbabwe (RBZ) said yesterday.
$20 notes will be injected in the first week of June.
This is likely to excite the transacting public, which has endured cash shortages, and buttresses the de-dollarisation path following adoption of the local currency last year.
With the economy still battling inflationary pressures, which set in since the scrapping of the multiple-currency regime, the $1, $2 and $5 bond notes and coins in circulation had lost value.
Official figures from the Zimbabwe National Statistics Agency show that year-on-year inflation in March 2020 was at 676,39 percent. This had made it inconvenient to carry wads of physical notes and coins, which were on limited circulation, leaving scores of people to opt for digital payment systems.
Although the US-dollar and other foreign currencies are permissible for domestic transactions for those with free funds, Government has set its focus on fully de-dollarising the economy within five years, after which the local unit is expected to be the sole legal tender. The de-dollarisation framework is backed by robust fiscal and monetary policy reforms being spearheaded by Treasury within the broader macro-economic stabilisation drive.
In a statement yesterday RBZ Governor Dr John Mangudya said the $10 notes will be in circulation by Tuesday next week with $20 notes set to be injected into the market early next month.
“The RBZ wishes to advise the public that the $10 and $20 bank notes issued on 14 May 2020 through Statutory Instrument 103A of 2020 will come into circulation as follows: the $10 bank notes will commence circulation on Tuesday, 19 May 2020, the $20 bank notes will be in circulation by the first week of June 2020,” said Dr Mangudya, adding that the features of the new bank notes will be adequately publicised prior to circulation.
“The Bank also advises that it has revised withdrawal limits upwards from $300 per week to $1 000 per week with effect from 19 May 2020.”
Dr Mangudya said banks have since been directed to ensure that the withdrawal limits were strictly observed. On the back of illicit cash deals and illegal money transfers involving the parallel market, the Governor warned that decisive punitive measures will be taken against those found on the wrong side of the law.
In an extra-ordinary Government Gazette dated May 14, 2020, the Ministry of Finance and Economic Development said the introduction of the $10 and $20 notes was being done in terms of the Reserve Bank of Zimbabwe (RBZ) Act (Chapter 22:15). “The Ministry of Finance has hereby, in terms of section 40 (3) of the RBZ Act (Chapter 22:15), made the following notice specifying the matters determined by the President in terms of subsection (2) of that section.
“This notice may be cited as the RBZ (Issue of ten dollar and twenty dollar bank notes) notice, 2020,” it said.
Earlier, the Central Bank had announced that the new set of higher denomination bank notes, worth close to $600 million, would be drip-fed into circulation.
According to the Government notice, the front side of both the $10, the dominant feature shall be the logo of the RBZ (three balancing rocks), with the visually impaired recognition feature to the left, and latent image showing the denomination, optical variable ink with colour shift from magenta to green, security thread with the inscription “RBZ”, watermark with highlighted inscription “RBZ 10” and see-through of the Zimbabwe bird looking to the left in perfect register as secondary feature. On the back side there shall be an impression of the RBZ building in Harare and four buffaloes.
The new $20 bank note whose basic colour would be blue, will be measuring 156mm x 66mm. The design of the $20 bank note shall be as on the front side of both the $20 note the dominant feature shall be the logo of the RBZ (three balancing rocks), with the visually impaired recognition feature to the left, latent image showing the denomination, optical variable ink with colour shift from green to azure, security thread with the inscription “RBZ”, watermark with highlighted inscription “RBZ 20” and see-through of Zimbabwe bird looking to the left in perfect register as secondary feature. Similarly, on the back side there shall be an impression of one elephant and the Victoria Falls image. Recent official updates indicate that around $1,4 billion in cash is circulating and the new notes are expected to take the total to $2 billion.
Cash shortages have triggered long queues at banks and an illegal market where premiums of up to 50 and 60 percent are charged to convert electronic money into cash.
The prevailing cash shortages have also led to the creation of a multi-tier pricing system, where prices of a single product differ depending on the customer’s mode of payment.
Authorities believe the new notes will enhance convenience to the transacting public and eliminate the illegal cash market. Zimbabwe re-introduced local currency in June 2019 following a ban on the use of the multiple currency regime the country had adopted in February 2009.