FINANCE and Economic Development Minister Mthuli Ncube has hinted that higher denomination notes will be introduced, in line with what President Emmerson Mnangagwa previously said.
The largest denomination currently is a ZWL$5 note, after the Reserve Bank of Zimbabwe (RBZ) introduced new $2 coins and $2 and $5 notes in November last year.
However, following a surge in demand for cash in the informal sector which operates largely on a cash basis or offers discounts for cash, informal traders have of late taken to rejecting smaller denominated coins particularly the 25c and 50c.
Professor Ncube said the issue of higher denomination notes was work in progress, but would not divulge a date for the release.
“I can’t give you a date as of now, but we are working on it. Sooner rather than later we will have higher denomination notes. Over time, we will put more and more higher denominated notes as the President has mentioned,” he said on the sidelines of a signing ceremony between his ministry and the African Development Bank for the tax and accountability enhancement project (TAEP).
The Treasury chief however maintained that currency volatility is a thing of the past.
“With progression of the year, you will realise and come to accept that the measures introduced will start bearing fruit.”
Last year, the Zimbabwe dollar plunged from 1:2,50, when it first started formal trading in February, to 1:16 on the interbank market.
The currency was weaker on the black market where it closed the year trading at 1:22 with the US dollar.
He indicated that as Treasury they were satisfied with how they closed their books at the end of the year, with budget deficit having been curtailed. Authorities, he said, were very careful that any new notes and coins pumped into the market would not induce inflationary pressures.
“We did very well in 2019 and the budget deficit stayed within targets of four percent. We are determined this year to keep it at 1,5 percent of GDP and that will contribute to currency stability.
“Likewise, the central bank will work very hard to make sure that the growth in money supply is within targets so that it does not contribute to currency volatility. This is because once we can de-couple currency volatility from price increases then we are sure that our currency will be a source of value,” he said.
The RBZ introduced new $2 coins and $2 and $5 notes following a surge in demand for cash in the informal sector which operates largely on a cash basis or offers discounts for cash. Lately, informal traders have taken to rejecting smaller denominated coins.
Minister Ncube said the RBZ was tightening controls to maintain the leash on broad money supply, which also drives demand for foreign currency thereby pushing exchange rates up, making it a tool for inflation transmission.
— Zim Voice