“Bond notes” and the law: A further thought

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Following the proposal by the Reserve Bank Governor, Dr John Mangudya, to introduce “bond notes” to operate “alongside” the multi-currency system currently in force in Zimbabwe, various legal experts have suggested that a legal framework may exist in terms of which the “bond notes” may be introduced.

I remain of the respectful view that the proposed introduction of “bond notes” by the Governor breaches the provisions of section 68 of the Constitution which requires the Governor, as an administrative authority, inter alia, to act lawfully, reasonably and in a fair manner. I have maintained that, currently, there appears not to exist a legal framework within which the “bond notes” will operate. Their introduction in my humble view would be accordingly unlawful.

The legal experts who have suggested a legal framework exists have relied on the provisions of Part VI of the Public Finance Management Act, the possible applicability of which I have discussed in a previous piece. In sum, I have argued that it is not lawful to introduce “bond notes” as envisaged by the Governor by the expedient of that Act. Its provisions to not contemplate what the Governor proposes to do through the introduction of fictitious “bond note” money.

Regrettably, Part VI of the Public Finance Management Act has in fact been repealed. It is no longer part of our statute books. Section 39(c) of the Public Debt Management Act [Chapter 22:21] repeals the whole of Part VI of the Public Finance Management Act. It follows, as observed by another legal expert, that the entire Public Finance Management Act argument does not arise.

It begs no mention that repealed law is no law at all. The law does not permit an administrative authority to purport to exercise a power arising from a law that no longer exists.

That said, it appears that no competent legal basis has yet been found upon which the Governor can rely upon to lawfully introduce bond notes as he proposes to do.

(C) Fadzayi Mahere. Not to be reproduced without the author’s prior permission.