Published: 20 July 2017

THE Reserve Bank of Zimbabwe (RBZ) has now injected $175 million worth of bond notes in the market, as cash shortages are pushing the central bank to draw on the Afreximbank-backed surrogate currency.

This amount reflects a $15 million increase in the bond notes injected into the market from $160 million that was reported at the end of June.

RBZ governor, John Mangudya told journalists on the sidelines of the official opening of the Grant Thornton headquarters in Harare on Tuesday evening that according to their books, there should be sufficient amounts of cash in the economy.

"We have $175 million of bond notes and, as to our estimates, we have about $600 million of currency under the multicurrency, which is in mainly United States dollars, in the market and that comes to around $800 million," he said.

"If you compare the $800 million dollars with the amount which is usable balances, bank balances that are usable as measured by real time gross settlement (RTGS) transactions, which is about $1,5 billion, if we divide $800 million by the $1,5 or $1,6 billion (RTGS) that is about 50%.

"So, if you have more than 40% of cash within the economy versus the $1,5 or $1,6 billion of RTGS balances that is sufficient liquidity in the economy."

Mangudya said what was afflicting the Zimbabwean economy was the lack of money in circulation.

"We have said many times, when money does not circulate, like blood within your body, you collapse if you have got a blood clot, so if money does not circulate in the economy, it is more like a haemorrhaging effect," he said.

Mangudya said he was not convinced that the expatriation of bond notes to neighbouring countries had an effect on liquidity, contradicting his deputy, Kupukile Mlambo, who has mentioned the issue several times.

"We are not convinced that that is where most of the bond notes are. Most of the currency — bond notes — is within Zimbabwe," he said.

The cash shortages seem to be worsening, with Mangudya revealing that the central bank was importing about $5 to $10 million cash every fortnight, instead of the originally envisaged $10 to $15 million.

Mangudya is currently in talks with Afreximbank to extend the loan facility reportedly backing bond notes, but has not mentioned by how much.
- newsday

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