Tuesday, 3 October 2017

WHY WE HAVE A CASH SHORTAGE : CHINAMASA

 Finance minister Patrick Chinamasa has said shortages of cash reflect the mismatch of US dollars in bank accounts and physical cash in the economy.

Physical cash is comprised of US dollars, bond notes and other currencies in circulation in the country. 

“This cash shortage reflects the negative perennial trade imbalance wherein our imports are more than exports by exports around $3 billion on a yearly basis.  So, we need to target our policies to reduce our trade balance,” Chinamasa told the National Assembly in a ministerial statement last Thursday.

He said the shortage of cash also reflects the poor circulation of money in the economy due to lack of confidence, discipline as well as rent seeking behaviour.

“Mr. Speaker, Sir, there is $1 billion of physical cash in circulation made up of $180 million in bond notes, $28 million in bond coins and $800 million.  We consider this to be sufficient if it was circulating efficiently.

“The $1 billion translates to around 15 percent of deposits which is international best practice in normal economies.” Daily News

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