Stiff penalties for bond notes rejection
LAWMAKERS have proposed legal provisions in the Bond Notes Bill for stiff penalties against anyone found rejecting bond notes as a legal tender.
This Bill will amend the Reserve Bank of Zimbabwe Act to enable the central bank to issue “bond notes” exchangeable at par value with the US dollar.
The law is meant to validate the issuance of bond coins currently in circulation, which were the forerunner to the notes “for the avoidance of doubt”.
Monetary authorities mooted the idea of bond notes to as an export incentive, which was pegged at 5 percent of the proceeds, to encourage export growth.
Apart from exporters, the export incentive is also paid for Diaspora remittances. Bond notes circulate alongside other currencies including South Africa rand, Botswana pula, Chinese yuan, Japanese yen and Australian dollar.
According to the Parliamentary Portfolio Committee on Bond Notes Bill, legislators also want the law to impose stiff penalties for anyone who exchanges the notes at a rate other than the prescribed one-to-one with the US dollar.
These proposals are contained in a set of recommendations legislators want included in the Bill, which establishes the legal status of the bond notes.
“The Bill should provide for penalties for those individuals and corporates that do not accept bond notes and coins as legal tender,” the committee said.
While the bond notes have defied initial skepticism and received overwhelming public acceptance, there have been isolated instances where some businesses rejected the notes or demanded a mix with US dollars.
Lawmakers also proposed that the Bill should provide a mechanism for recourse at the expiry of the bond guarantee to instil confidence in the public.
The bond notes, introduced by the RBZ in November last year, are backed by a $200 million facility from regional bank, African Export and Import Bank.
The committee also observed that some banks have stopped use of ATMs, much to the prejudice of the banking public. It is recommended that the RBZ and the banks ensure that bond notes are dispensed from the ATMs.
The lawmakers also recommended that the Reserve Bank should publish, on a quarterly basis, information relating to the value of exports generated and the corresponding value of the bond notes and coins paid to the exporters.
According to the Parliamentary Committee on Bond Notes, the central bank should also consider establishing a committee which includes representatives of business and labour, which limits the issuance of bond notes.