Government has revealed that higher currency denominations including a $50 dollar note will be introduced in the next few months as it moves to address cash shortages.
Finance and Economic Development Minister Professor Mthuli Ncube revealed this during an interview with Bloomberg TV on the sidelines of the World Economic Forum underway in Davos, Switzerland.
Prof Ncube said Government was carefully injecting cash into the economy so as not to trigger inflation.
“First of all, we are doing two things, we are injecting cash into the economy, drip feeding the economy. But we want to do it in a non-inflationary way where we are changing electronic currency for physical cash,” said Prof Ncube.
“Second thing, we are introducing higher denomination notes $10, $20 and $50 during the course of 2020. That is what we would be doing; introducing higher denominations notes to make sure that it’s easy for citizens to transact. That is going to happen in the next few months.”
He said Government has made several strides to stabilise the local currency with month on month inflation figures steadily dropping.
Prof Ncube said the high inflation rate was however normal as the local currency was finding its footing among other currencies.
“But year on year remains high but that is expected when you liberalise a currency and it’s trying to find its equilibrium and it’s trying to find its footing. We however believe in the last few months it has been quite stable, actually. It has stopped the transmission of currency volatility into pricing so I believe we are on our way to dealing with inflation. It will take time but it is headed there,” he said.
Prof Ncube said Government will continue engaging civil servants to address their salary concerns.
He said Government was aware that retailers and service providers were pricing their products and services against the US dollar.
“Wages have to catch up with adjustment to exchange rates because retailers are still pricing in US dollars in their heads and translating that to domestic currency. It has squashed the purchasing power of wages and we are closing that gap by allowing wages to rise. We know the issue and we are dealing with it,” said Prof Ncube.
He said Government was partially privatising some of its entities as it wants the private sector to lead the economic turn around.
Prof Ncube bemoaned the severe effects of climate change which have affected the country’s economic performance.
“We decry the impact of climate change. For us it is real. We had a cyclone last year, followed by drought, it has impacted on food output. We are importing food and we have also been receiving support from the international community. We are shifting our budget to finance and climate-proof our agriculture. We are investing in irrigation we are investing in drought resistant crops. We are doing everything we can but also we appreciate the support from the international community,” said Prof Ncube.