The Reserve Bank of Zimbabwe injected an additional $20
million of banknotes into circulation in the last week, with much of it
channelled to the People’s Own Savings Bank (POSB), used to distribute a lot of
pensions.
The funds are expected to marginally ease the demand for
physical cash. This was said by Finance
and Economic Development Minister Professor Mthuli Ncube in an interview on the
sidelines of a familiarisation tour of the Insurance and Pensions Commission (IPEC)
head office in Harare yesterday.
“In the last week alone, we have put in about $20 million,”
said Prof Ncube. “We targeted POSB specifically, but not exclusively, because
we know that a lot of our ordinary citizens are banking with them and it’s
important that they have all the cash that they need.”
Depositors yesterday
said they still faced challenges obtaining cash from banks, adding that they
observe the situation was getting worse.
Economists say while the RBZ was right to increase cash in
circulation given the high demand, it would take time before cash queues start
to subside.
The recommended cash levels in circulation are 10 percent
to 15 percent of money supply, which is presently estimated at $19 billion.
This means Zimbabwe requires about $2 billion in physical
cash, yet there is about $720 million in circulation.
Since the introduction of new notes and coins in November,
about $120 million has been injected into circulation.
The RBZ introduced new $2 coins and $2 and $5 notes
following a surge in demand for cash in the informal sector which operates
largely on a cash basis or offers discounts for cash.
Informal traders say that this allows them to buy black
market foreign exchange at a discount.
As Unity Day, Christmas and New Year holidays start
tomorrow, there has been a sharp rise in the demand for cash across the country
for bus fares and for spending in rural shops which often seek a high premium
for mobile money transfers.
This has seen long queues at banks, amid reports that some
unscrupulous bank workers were diverting personal withdrawals to the informal
cash market where it is sold at about 30 percent premiums, half what was usual
a month ago, but still steep.
Prof Ncube said as more banknotes were being injected into
circulation for the convenience of the transacting public, bigger denominations
will start circulating in the first quarter of next year.
Turning to IPEC management and staff, Prof Ncube said Government
was aware of the work underway regarding the revaluation of pensions in light
of currency changes in 2009 and this year.
He said Government will be supporting the insurance
regulator to make sure industry players did the right thing.
Prof Ncube said there was need for IPEC to engage in public
awareness programmes on the goings-on in the sector.
“I guess there is need to do more awareness in terms of the
public; educate the consumer about what is going on in the industry,” he said.
Herald
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