Cash crisis deepens; RBZ says hepless

Importing cash is not an overnight event … John Mangudya

Mangudya also hit out at business persons who don’t bank their money, opting to keep daily takings at home as a recent order for tobacco farmers to be paid through banks failed to alleviate the liquidity crisis.

The RBZ chief blamed civil service salary and bonus payments for the cash shortages.

But the opposition People’s Democractic Party (PDP) recently insisted that the “cash crisis is because there is no production and real activity in the economy” with the key sectors having effectively “collapsed”.

“I … urge people to use point of sale when transacting,” Mangudya was quoted as saying by State media Tuesday.

“It is a national responsibility for everyone; especially at a time we are not in a position to print money. There are local businesspeople that do not bank their daily takings, preferring to keep the money in safes at home, fuelling cash shortages.”

Zimbabwe ditched its then virtually worthless local currency in 2009 opting, mainly, for the US dollar and, in the process, denying the RBZ the ability to ‘print’ – a key monetary policy instrument for boosting the amount of overall money in the banking system.

Local banks were this week reportedly limiting withdrawals and disabling ATMs and the ZimSwitch system.

Mangudya said he was aware depositors were struggling to access their funds.

“(One of) our key functions is to ensure … that people are able to get their money when they want it,” he said.

“We are aware of the situation and the high demand for cash because of salary and bonus payments (for civil servants).

“However, importing cash is not an overnight event . . . it takes time but we are confident that the banks will be able to sufficiently meet the requirements of the banking public.”

No economic production

However, PDP economic and finance secretary Vince Musewe recently warned that the cash crunch would worsen as the country struggles with an economic crisis that has lasted more than a decade and a half.

“Real production is in sectors such as agriculture, mining, production, ICT … (but) in Zimbabwe, these sectors have collapsed,” Musewe said in a recent statement.

“Without wealth creation, the liquidity crunch is evident.  Zimbabwe also lacks capital in the form of Foreign Direct Investment (FDI) and basic saving.”

The PDP official also blamed finance minister Patrick Chinamasa for the crisis.

“The cash crunch in the country has been worsened by finance minister, Patrick Chinamasa who is raiding the Real Time Gross Settlement Systems (RTGS) balances at the Reserve Bank of Zimbabwe (RBZ),” Musewe explained.

“Since the end of the government of national unity (GNU), this terrible government has made it a habit of looting bank balances held at the RBZ in order to finance government recurrent expenditure such as wages and salaries.

“Chinamasa’s nefarious activities at the RBZ are creating a huge gap in the RTGS balances and it is only just a question of time before the chickens come home to roost and we have the mother of all bank runs on the market.”