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RBZ: Panic withdrawals behind cash squeeze

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CENTRAL Bank Governor Gideon Gono said Wednesday that banks have enough cash to support the transacting public, as he struggles to assure Zimbabweans and nervous markets following last week’s elections.
Mugabe and his Zanu PF party’s landslide victory in last week’s polls have sparked concern over a possible radical shift in economic policy with investors saying there were “bracing for the worst”.
The country’s stock market plunged 11 percent on Monday after confirmation of the election results and Zimbabweans have been overwhelmed by fears that prices of goods and fuel would go up.
The central bank governor on Tuesday ruled out a return of the Zimbabwe dollar for the “foreseeable future”, quashing market speculation over the possible reintroduction of the local currency following Zanu PF’s triumph in last week’s elections.
The Zimbabwe dollar was ditched in 2009 after being rendered worthless by hyper-inflation with the government opting for more stable foreign currencies led by the US dollar as well as the South African Rand and Botswana’s Pula.
On Wednesday, Gono was in Bulawayo where he met the business community and journalists, on a mission to allay fears of gloomy economic prospects.
He said cash shortages being experienced since the announcement of election results were due to panic withdrawals by people who feared the immediate return of the Zimbabwean dollar after Zanu-PF’s victory.
“Access to loans is a function of deposits in a bank and if you are taking away deposits from the bank it means the bank will have nothing,” he said.
“This is what has happened in the banking sector in the past few days, given the extent people have withdrawn their deposits panicking that their money will be locked in banks as the new Government will revert to local currency.
“Let me talk about the rumoured imminent return of the Zimbabwe dollar. Certainly, no country can be happy to use other people’s currency forever. When we introduced the multi-currency system, we never said it would be our desired end for ever.
“We are fully aware that before the return of the local currency, the economy should have taken a sustained path of growth and I am not seeing this in the next three or four.”Advertisement