By Alois Vinga
THE Reserve Bank of Zimbabwe (RBZ) is set to inject more notes and coins into the economy after continued increases in prices of goods and services have outpaced current liquidity.
The move, announced through a Friday Monetary Policy Statement by central bank governor John Mangudya, is also set to ease recurrent cash shortages that have been experienced in the country in the last three years.
Mangudya said the move, which comes against the backdrop of the withdrawal of the US$ as transactional medium in the country, has created a vacuum which has forced the central bank to issue more notes and coins into circulation.
“The increase in the demand for physical cash has worsened cash shortages, as reflected by unending queues at most banks in the country,” said the central bank chief.
“In addition, visitors to the country including tourists are failing to access cash for their domestic transactions.
“Failure to get cash is undermining confidence in the local currency as well as forcing economic agents to resort to the illegal transactions in foreign currency and to selling cash at a premium.”
Mangudya however maintained that the cash will be printed cautiously to avoid triggering hyperinflation and levels.
He said levels of within 10 to 15 % of currency currently in circulation will be printed.
The additional cash will be injected on a gradual basis to support productive sectors and lessen the inconvenience caused by physical cash shortages to the transacting public.
“The cash injections will not result in an increase in money supply as banks will use their existing RTGS balances to exchange for cash,” added Mangudya.
The announcement comes at a time the banking public has been failing to access cash from the banks, allowing individuals to trade cash on the street at premiums ranging between 25 to 45 %.