ZIMBABWEâ€™s domestic debt increased 200% inside one month to $60,8 trillion from $21,1 trillion as government continued to borrow from financial institutions to funds operations, figures released by the Reserve Bank of Zimbabwe (RBZ) this week say. Of the $60,8 trillion, $39,8 trillion was an advance to government. Interest payments accounted for $5,7 trillion. Interest payments account for 75,4% of the total debt.
Governmentâ€™s recourse to the domestic market for funding has led to an expansion in money supply growth.
The increasing government debt stock raised fresh fears of renewed turbulence in the crisis-ridden economy, battling high inflation currently topping 100 580,2% for January.
The debt is likely to rise further on increased borrowing by government to finance the presidential and parliamentary elections scheduled for March 29. Government wants the money to buy fuel, maize and wheat.
Money supply (M3) growth continued on an upward trend increasing to a new record high of 51 768,8% in November from 24 463,6% the previous month the RBZ said.
Money supply is the total supply of money in circulation in a given countryâ€™s economy at a given time. It is considered an important instrument for controlling inflation. The continuous rise in money supply would further trigger inflation.
“Annual broad money growth recorded a 51 768,8% growth, during in November, largely contributing to the increase in broad money growth where increases in credit to the private sector of 125 348,4% and credit to public enterprises 12 425,3%,” said the RBZ.
Analysts said the money supply figure would be over 100 000% for January due to expansionary fiscal and monetary policies being pursued by government and the RBZ.
The central bank last month introduced higher bearer cheque denominations of $1 million, $5 million and $10 million.
The previous month the bank had introduced a new $250 000, $500 000 and $750 000 to ease cash shortages that the country experienced between October and January.–Paul Nyakazeya