Money Supply Up 64 113%

MONEY supply (M3) growth continued on an upward trend, increasing to a new record of 64 113% in December last year from 51 768,8% the previous month, officials figures showed this week.

The Reserve Bank of Zimbabwe (RBZ) this week said annual broad money growth recorded a 64 113% growth during the month of December.

Largely contributing to the increase in broad money growth were increases in credit to the private sector at 177 043,5% and to public enterprises at 60 826,8%.

“Net credit to government increased from $993,4 trillion in November 2007 to $118,5 trillion in December 2007. Domestic credit also rose by 156 168,6% to $490,5 trillion in December 2007,” the bank said.

Narrow money rose by 66 658,6% from December 2006 to December 2007.

Quasi-money grew by 88,3% in December 2007, indicating a decline from 142,4% recorded in November.

Money supply is the total supply of money in circulation in a given country’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, which is currently at 165 000%.

Analysts said the figure would be over 100 000% by January due to expansionary fiscal and monetary policies being implemented by the government and the central bank.

Last month the central bank introduced higher bearer cheque denominations of $25 million and $50 million.

This followed the $1 million, $5 million and $10 million that were introduced two months ago.

By Paul Nyakazeya