GOVERNMENT efforts to ease the biting cash crisis have hit a snag with revelations that, despite a vigorous advertising campaign, it is not yet ready to inject fresh bank
notes into the financial system.
This comes as depositors show every sign of holding on to their cash, anticipating a government reprieve on plans to withdraw $500 notes from September 26.
Government had expected companies and the public to offload excess cash into the system. But they appear to be hanging on to the little they have. Cash remittances to the central bank have plunged despite announcements that the $500 note would soon cease to be legal tender.
It is reliably understood that government might extend the grace period for individuals holding the notes to deposit them.
The cash crisis this week remained critical as depositors declined to surrender their cash, preferring to spend it on day-to-day needs as inflation officially reached 426,6% but in reality nudged 600%.
An official at Intermarket Building Society’s Newlands branch said the situation had worsened during the last two weeks with deposits shrinking even further.
“Deposits are at their lowest since the cash crisis started. There is also very little coming in from the central bank,” the official said.
Banks are receiving as little as $1 million a day from the Reserve Bank of Zimbabwe (RBZ).
Government announced this week that it would introduce “bearer cheques” for use as cash to ease bank-note shortages.
But analysts said it remained unclear to business and the general public how the new purchasing system works.
“The government has remained silent on what will happen to the old notes that are in circulation,” the analysts said. “There is no proper framework for the transition from the $500 notes to the rebranded ones. It is also not clear what will happen to retail shops who receive the old notes a day before the deadline.”
Analysts said government’s campaign to encourage individuals and businesses to surrender their cash was flawed. They said the advertisements flighted in the media only notified the public of the introduction of new notes without saying clearly what the fate of the old ones, which are still in circulation, would be.