HomeBusiness DigestZim broad money supply shoots up

Zim broad money supply shoots up

THE country’s broad money supply increased in the month of May to US$8,55 billion up from US$8,117 billion in April.

By Kudzai Kuwaza

According to the Reserve Bank of Zimbabwe (RBZ) monthly report for May, broad money supply increased sharply from the same period last year when it stood at US$6,2 billion, representing a year-on-year increase of 38%.

“The annual growth rate of broad money was 37,98% in May 2018, representing a 5,27 percentage point increase from 32,71% registered in April 2018. This was on the back of year-on-year expansion in transferable deposits, (51,45%); and negotiable certificates of deposit (43.36%). Time deposits, however, declined by 7,44%,” the RBZ said.

This comes as the supply of bond notes has increased by 101% from US$175 million in May 2017 to US$354 million in May 2018, surpassing the US$200 million Afreximbank facility backing the currency. The annual growth in credit to the private sector declined from 8,65% in April to 8,40% in May. On a month-on-month basis, credit to the private sector increased to US$3,8 billion in May, from US$3,7 billion in April. Real-time Gross Settlement (RTGS) transactions increased by 26,1% from US$5,79 billion in April 2018 to US$7,30 billion in May.

The total value of transactions processed through the National Payments System (NPS) increased from US$11,17 billion in April to US$13,85 billion in May.

“NPS transaction volumes also registered a 15,5% increase, to close the month under review at 163,84 million transactions,” the RBZ stated.

The total value of mobile and internet-based transactions amounted to US$4,52 billion in May, up from US$3,83 billion in April while cash transactions increased by 14,8% to close the month under analysis at US$261,45 million compared to US$227,65 million in April.

The report noted that during the month under review, annual headline inflation remained unchanged at the previous month level of 2,71%.

“This was on account of increases in both food and non-food inflation. The stable inflation over the past three months was attributed to subdue domestic and external pressures, including parallel market premiums, which fell from above 60% in December 2017 to around 40% in May 2018,” the central bank said in the report.

During the month under review, the RBZ notes, annual headline inflation remained unchanged at the previous month’s level of 2,71%. This was on account of increases in both food and nonfood inflation.

Just last month, Mangudya said he was injecting between US$100-US$150 million into the economy to end a cash shortage.

“The Reserve Bank has injected more cash into the banking sector, therefore, those people who are selling cash at 100% would soon count their losses. If they are being encouraged by politicking, they are going to lose money. This week alone (last week) we have injected $25 million and next week we are putting $30 million, so this month we are saying we have increased it from $100 million to $150 million, therefore there is no logic for prices to go up when there is more money in the economy,” he said.

“Bond notes in the market right now is about $390 million. Whenever we release money like what we are doing, some of the money remains in the banks and some of the money is captured by people in circulation. So when we talk about money, do not look at the money at the banks only,” Mangudya said.

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  1. what economics are these mr mangu? i though the more the money u inject the higher the inflationary pressure. hameno hako uchaita kunge vaGONO ukateera gwara iroro.

  2. My worry is Zimbabwe banks are used for money laundering. How come they allow some dubious deposits/withdrawals in clients accounts. Daily people withdraw money, sells them with bank transfers at 15-20% and they go back to with draw. So if I can withdraw 100 dollars everyday from my bank I don’t need to go and work. I withdraw the cash, sell at the market for 120. Go back and withdraw 100 sell it again for 120 so daily I will be making 20 from nothing. Take 24 days multiply by 20 I get 480 every month, so why should I go to work? If you are lucky that your bank gives USD you withdraw say USD400 sell it by transfer at 70% you get 680 dollars into your account a cool 280 for nothing. Banks are allowing that to happen. Surely people must be asked proof of wha products they are selling when such suspicious deposits are happening. Some do it via ecocash then transfer it to the bank, withdraw and then sell again. Is RBZ in control? Does Mangundya know this is what is happening. I suppose banks must limit the amount of transactions in individual accounts. Why should Peter be like OK Bazaars who bank money everyday yet he does not have any products he is selling? So as some banks limit their clients at 1 transaction a month whilst others allow daily withdrawals we will always have this problem of people withdrawing and selling cash.I would think every bank must either allow 2 withdraws a month and investigate unusual deposits. Even ECOCASH, ONEWALLET and TELECASH must limit transfers into accounts so that noone is allowed to have multiple deposits unaccounted for into these wallets.

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