Annual broad money supply up 20 percent

ZIMBABWE’S annual broad money supply grew by 20 percent in March to $5,88 billion, driven by an increase in transferable deposits and negotiable certificate of deposits, latest data from the central bank has shown.

Transferable demand deposits and negotiable certificate of deposits grew by 27,85 percent and 8,42 percent, respectively, in March relative to the comparable period last year, though time deposits fell 3,93 percent.

Broad money supply (M3), a measure of the money in circulation which includes physical currency and demand deposits, increased by 1,88 percent from $5,77 billion in February on tobacco sales.

“The expansion of money supply during this quarter of the year is attributable to inflows relating to the tobacco selling season,” said RBZ.

Domestic credit increased by 17,83 percent to $7,92 billion from $6,74 billion in the same period last year. On a month-on-month basis, domestic credit increased by 2,04 percent from $7,76 billion recorded in February this year.

Month-on-month growth was reflective of 3,66 percent and 1,55 percent expansions in credit to the private sector and net claims on government, respectively.

However, on an annual basis, credit to the private sector fell by 0,3 percent to $3,49 billion in March, from $3,53 billion recorded in the comparable period last year.

“The developments in credit to the private sector continued to reflect cautionary lending by banks,” RBZ said.

Zimbabwe bank deposits are mainly short-term in nature, and the sectoral distribution of credit to the private sector remains skewed towards sectors that have a short-term turnaround. Credit to households claimed the largest share of credit, at 22,21 percent, followed by agriculture at 16,52 percent while services and manufacturing claimed 13,96 percent and 13,58 percent respectively as at end of March.

Sectors requiring long term capital investments such as transport, communication, mining and construction, received the least share of the credit, RBZ said.

Additionally, the value of transactions processed through the National Payments System (NPS) increased by nine percent to $7,01 billion in March, from $6,43 billion recorded in February. — The Source