Reserve Bank of Zimbabwe Deputy Governor Dr Mlambo confirmed at a conference yesterday that a total of Z$110 million in new notes and coins was injected into the economy. The government introduced the new Zimbabwe dollar last month to address cash shortages that were causing distortions in the market with informal traders selling physical cash at a premium of up to 60% to 70%.
Four weeks later, the situation still hasn’t improved. The ordinary citizen still cannot easily access cash from banks. Long ATM and bank queues still persist. More often than not consumers are turned away from banks due to unavailability of cash. Most banks such as Standard Chartered bank are not dispensing cash in their ATMs and clients can only access a maximum of Z$300 once a week.
There are allegations however that the bulk of new Zimbabwe dollar notes and coins was injected into the black market instead through corrupt individuals. Ordinary citizens are accessing this cash at premiums of up to 70%.
In response to the persistent cash shortages, Dr Mlambo said that the Reserve Bank wants to target money supply growth at a reasonable rate. He further reiterated that cash supply will be increased to only 10% of total money supply. At this point, it is not in the Reserve Bank’s interest to inject a lot of cash as it will promote inflation. So the bank will continue doing so cautiously.