US$900 million in cash and bond notes/coins worth US$136 million are circulating in Zimbabwe; but fiscal indiscipline — principally hoarding and externalisation — continues to curtail market liquidity, a Reserve Bank of Zimbabwe study has established. RBZ data also shows that bank deposits increased from US$6,14 billion in September 2016 to US$6,51 billion last December on the back of reduced grain imports, increased Diaspora remittances and remarkable export growth.
The study covered February and March 2017 based on the Kalman filter — a method used to estimate the amount of cash in circulation.
RBZ Governor Dr John Mangudya told The Sunday Mail that greater discipline and increased manufacturing would help resolve cash shortages.
He said, “The RBZ estimates that there is around US$900 million of cash in circulation, and this is measured when you are using the Kalman filter and other methodologies to measure the amount of money in the country. This, together with bond notes, is substantially in line with best practice where the ratio of cash in circulation to deposits is around 10-20 percent. We cannot call it a cash crisis, but a crisis of indiscipline, productivity and lack of business management. We are now evoking provisions of the Bank Use Promotion Act to ensure and encourage people like traders, wholesalers and other dealers to bank their money. There is need for a paradigm shift from a consumption type of economy to a productive one.”
Dr Mangudya said authorities were importing US$60 million per month and promoting “plastic money” as part of measures to make cash available.
He was optimistic more individuals and businesses would bank money in response to law enforcement and bank use promotion.
“It is encouraging to note that in keeping with the thrust of promoting electronic payments, a number of payment service providers and banks have enhanced deployment of devices and access points. Further, the Reserve Bank reduced the charges for using electronic payment platforms to, for instance, one percent for Automated Teller Machines and 1,25 percent for bank counter withdrawals. We have a strong craving to ensure Zimbabwe becomes a cash-lite society by year-end, and we anticipate that this policy direction is critical to minimise mismatches between cash and virtual money, and for preserving foreign exchange in nostro accounts for foreign payments.
“Contrary to some people’s beliefs, the exact situation regarding money supply is that deposits have been increasing over the nine years that the multi-currency exchange system has been in place.
“The growth is attributable to the growth in exports, contracting foreign loans, Diaspora remittances and reduction of imports, especially grain due to the success of Command Agriculture.”
Zimbabwe has been grappling with cash shortages since April 2016 largely due to externalisation, hoarding and a huge external trade deficit.
Last week, the RBZ set the cashback limit at US$20 per day and authorities have deployed 32 540 point-of-sale machines to promote plastic money use.- State Media
These goons are in deep denial.
Stupid and dull gorvenor,nobody can hoarde a commodity if it is available for everybody to use. The shortage means the economy is the one that is in shambles & people dont have confidence in your zano pf gvt coz it has dismally failed (failed state). The only solution is to fix the economy & do away with gross corruption from your top brass.
Thanks zimeye for this good platform. Mangu day is forgetting that people are the major stakeholders to this crisis. Focusing on TM and OK is a waste of time. These 2 companies are have helped to ease the pain of cash by providing cash backs. The Indian, Chinese, Pakistan, lebaneese, Nigerian shops are the biggest culprits. The don’t have swiping machines? All their transaction are cash. I have no doubt that they not recording their sales for tax purposes. Zimra where are you? Shops along Charter, Nyerere, Cameron, Mbuya nehanda, Kaunda, Takawira, Chinhoyi and Harare street, 95% of them do not have these pos machines. Mangudya please explain this, shops that are selling imported goods are not running out of stock yet you are not allocating them USD. We’re they getting USD. Ndokunema bond ako. Your look East policy is destroying this country. Your so called all friends are destroying this economy. Why are we having a influx of Asians in a dying economy while our citizens are leaving for even poor nations like Zambia Mozambique and Malawi ? Work up Zimbabwe .
Mr new leadership is writing sense. I’m surprised by you Mr Governor when you attack the whole nation for lacking discipline. Are you the only one with discipline in this whole country? This is why you have failed to convince ZImbabweans with your crayz policies. We have lost confidence in you
Mr Governor problems won’t be solved by putting measures of restrictions. This current cash problem has nothing to do with you but rests with the leadership. People have lost confidence in the leadership . Zimbabwe has tried everything in the book but wont work no matter how good. Any measure you put creates any opportunity for few to make money at the expense of the majority. How do you explain this, you set a cash back limit of $20 per day when your minimum withdrawal limit is at $1000 per for individuals is not mate by the banks? Confusion is also gripping you. Denford Mutashu does not own any retail outlet but a hair salon. He has been making statements in support of your measures but Mr Governor are you aware that retail outlets are the ones who have been buying USD with bond notes. Most supermarkets were allowing a maximum of $80/purchase of goods $40. Are you now saying were purchasing goods to get cash back? Stop fooling yourself