Cash shortages hit Zimbabwe
Aserious shortage of Zimbabwe Gold (ZiG) has hit the market despite monetary authorities releasing notes and coins last month amid fears the crunch will affect aggregate demand.
The Reserve Bank of Zimbabwe (RBZ) started circulating ZiG notes and coins last monthend. The ZiG replaced the Zimbabwean dollar, which had lost three-quarters of its value this year.
A survey conducted by Standardbusiness last week showed that ZiG notes were not readily available through banks. Shortages were observed in various sectors including transport, supermarkets and the informal market.
The situation is causing disruptions to businesses.
“We do not have enough ZiG from the central bank,” economist Gift Mugano told Standardbusiness.
“The size of the money supply is about ZiG$90 million and the size of our economy is about ZiG$ 20 billion.
“So, the question is how does the government liquidate and expect to provide enough cash in the market when you have that small share of ZiG?
“The central bank has not printed enough ZiG.
“Last time I checked, they had printed small denominations and as a result, they have starved the market.
“That’s a failure, so the bank must print enough ZiG currency and enough denominations for the market.
“At this stage we should not be struggling to access ZiG just for change, its serious incompetence on behalf of the central bank.”
He said the scarcity of the ZiG could lead to increased dollarisation, undermining the intended purpose of the local currency.
“Even the governor (John Mushayavanhu) is very clear in his monetary policy that he is pushing for banks to put certain liquidity into non-negotiable instruments so that they dry the market,” Mugano said.
“What he does not realise is that he is finalising dollarization, because if ZiG is not available, what is available is the US dollar.
“So we are going to use the foreign currency. He effectively brought small denominations and delayed the disbursement of large denominations.”
Another economist Prosper Chitambara said the shortage could be a result of the central bank’s cautious approach to avoid introducing too much liquidity into the economy, which could destabilise it.
“It could be a supply issue; the central bank did not print enough money,” Chitambara said.
“Maybe they are trying to monitor the situation because you do not want to introduce too much liquidity in the economy; it can actually have a destabilising impact on the economy,” he said.
“Of course, there is a strong demand for the ZiG, especially for the purposes of facilitating change.
“So obviously, we need to create that fine balance in terms of ensuring that there is enough supply of ZiG.”
National Consumer Rights Association coordinator Effie Ncube said the shortage was causing serious havoc in the market.
“There are insufficient ZiG notes circulating at the moment