…ATM transactions plunge
CASH withdrawals from Automated Teller Machines (ATMs) dramatically plunged to US$41 000 in June from US$5,7 million in April, while point of sale (POS) transactions shot up by 92% as the country continues to experience its worst liquidity crisis since the adoption of the multiple currencies in 2009, statistics from the Bankers Association of Zimbabwe (BAZ) show.
Zimbabwe’s unsustainable trade or current account deficit, poor balance-of-payment position as well as massive revenue leakages and an uneven distribution of liquidity in the market are the major reasons behind the prevailing serious cash shortages buffeting the economy.
In May, the Reserve Bank of Zimbabwe (RBZ) said bond notes, which the apex bank sees as an option to ease the current cash crunch, will start circulating in October amid public outcry that government wants to re-introduce the demonetised Zimbabwe dollar through the back door.
This comes after the RBZ announced that it would, among other measures, introduce bond notes backed by a US$200 million facility backed by Afreximbank.
Latest figures obtained by businessdigest show that the number of active ATMs dropped to 144 as at June from 221 in April. The value of point of sale transactions rose to US$93 705 899,48 from US$48 910 788,98. POS machines increased to 7 549 in June from 5 820 in April.
The situation exacerbated in April due to depleted nostro accounts balances which have been drained by the ballooning import bill.
Banking institutions have in recent months witnessed increased pressure on their nostro accounts because Zimbabwe is now a net importer due to a wave of company closures and a dramatic fall in production.
This has resulted in banks being unable to import cash to meet their clients’ demands and properly perform their financial intermediation role.
The monthly value of internet banking transactions, which stood at US$10 461,42, declined to US$6 259,92 in May before rising to US$9 493,84, BAZ figures show. Mobile banking transactions rose to US$5,8 million in June from US$1,6 million in April.
This situation, characterised by a trade deficit, huge balance-of-payments gap and widening current account deficit, prompted the RBZ to increase the percentage amount that banks could keep in their nostro accounts from 5% to 10% of total deposits.
The depletion of nostro accounts held by local banks has resulted in increased bottlenecks in international payments.
Weakening commodity prices on the international market, compounded with lower-than-projected tobacco deliveries against the backdrop of an El Nino-induced drought, have reduced export earnings.
This in turn has resulted in the depletion of nostro accounts of banking institutions.