CASH shortages will ease in the coming weeks after the Reserve Bank of Zimbabwe imported $400 million, while tobacco and gold export earnings are expected to boost liquidity.
A shift towards plastic money, which now accounts for 96 percent of all transactions, has also alleviated the cash burden. To add to the $400 million, the RBZ will also draw from the $1,5 billion Afreximbank loan facility. The amount of bond notes in the market has topped $350 million, and $40 million worth of coins are in circulation.
RBZ Governor Dr John Mangudya told our Harare Bureau last week that under normal circumstances, $800 million in circulation would be adequate to meet the nation’s cash demands but hoarders were causing shortages. However, he said monetary authorities were confident that their efforts over recent months, and strategies being implemented now, would minimise bank queues in two months.
“What I want to promise the nation is that within the next two months, the queues are going to be minimised. Starting from the end of this month, we should see increased supply of cash on the market as we get more money from tobacco, gold exports as well as increased supply from our lines of credit.
“We have imported cash amounting to about $400 million from January to last week, which is January to the end of April.
This is higher than what we did last year at around the same time. We are going to continue doing that. This has been because of the facilities provided by Afreximbank, increased production of gold and the need to ensure that the economy is liquid so that the public can transact.
“The biggest challenge we have is poor circulation of money. If the money was circulating, we would not be having the cash challenges. Zimbabweans are looking at foreign currency as a store of value and not as something that they should circulate.
“Instead of circulating the money, a good number of our people take the money of the country by paying for DStv, school fees for their children in foreign countries, shopping and many other things. There are also other payments such as raw materials and service payments.”
Dr Mangudya said increased economic production was the long-term solution to cash challenges. Addressing the National Assembly last week, Finance and Economic Planning Minister Patrick Chinamasa said the culture of “withdrawing money to put it under the pillow” made it difficult to overcome cash shortages.
“We know the problems of this economy: low production across all sectors of the economy, low exports, and low reserves and to add on to that no currency of our own. The totality of all those causes the challenges that we are facing and we have policy measures to address each and every one of those issues.
“Do not look at cash shortages in an isolated manner, look at it globally, holistically,” he said.
Minister Chinamasa also said increased production remained the most viable solution to money supply shortages, and in that regard Government’s policy measures like Command Agriculture, Command Fisheries and Command Livestock were geared at boosting output.
According to latest figures from the Tobacco Industry and Marketing Board, over US$250 million has been paid to farmers — an 8,42 percent increase on last year’s figure. Gold output is expected to rise from 24,5 tonnes to 30 tonnes this year.