MONEY supply growth surged to 590,6% in April, from 548,7% in March, figures from the Reserve Bank of Zimbabwe indicate.
nnual broad money (M3) surged to 590,6% in April from 548,7% in March,” the Reserve Bank said on an update on its website.
“Quasi and narrow money for the period under review also increased to 572,3% from 543,9% and 585% from 533,9% respectively,” the bank said.
Investment researchers this month said money supply would maintain an upward trend during the year due to increased government expenditure to fund salaries, subsidies on food, fuel and electricity.
During the period under review, reserve money continued on an upward trend, closing the month of April at $31,3 trillion after increasing by $5 trillion from $26,3 trillion in March.
“The increase was largely driven by currency in circulation and banks required reserves which increased by $140,7 billion. Other deposits decreased by $393 billion to $100 billion,” the Reserve Bank said.
Brains Muchemwa, an economist with Metropolitan Bank, said high rates on the market and a looming supplementary budget would push money supply upwards.
“Money supply is not going to come down in the short-term due to high concessionary funding, high interest rates prevailing on the market and a looming supplementary budget,” Muchemwa told businessdigest.
The government has been accused by both critics and supporters of running huge budget deficits that have stoked inflationary pressure through increased money printing and domestic borrowings.
High levels of money supply growth in a contracting economy add to inflationary pressures.
Inflation is currently sitting at 1 194% year-on-year for May.