Fidelity ordered to print more money
http://www.samara.co.zw/zimin/index.cfm?id=2099&pubdate=2000-06-09
GOVERNMENT
ordered the Reserve Bank-owned Fidelity Printers to print $250
million a
fortnight ago to be injected into the market in a bid to have more
money at
its disposal as the election draws near, the Zimbabwe Independent
has
established.
Central bank sources this week confirmed Fidelity Printers
had been ordered
to ratchet up its printing schedule to make available money
for government
to borrow for use in its electoral
campaign.
Government, whose coffers are virtually empty due to an
insatiable appetite
for cash, borrows from the domestic market to finance its
operations. Over
the years a very thin line has separated government and
ruling Zanu PF
operations, with the party given unlimited access to the
fiscus.
The government's use of its overdraft facility with the central
bank has
intensified with its latest borrowings accumulating to nearly $10
billion in
a single week last month. Government borrowing through the
overdraft
facility represents the creation of money since it would be
borrowing
against non-existent assets. This spurs money supply growth and
creates
aggregate demand in the economy since there would be too much money
chasing
few goods.
The Independent understands Fidelity Printers staff
were up until last week
working around the clock, Monday to Friday, to feed
the demand for cash. On
Saturdays and Sundays they break in the evenings,
only to resume the cycle
on Mondays. From last week the printers were working
up to 11pm.
"We do not know what has caused this sudden demand for more
cash on the
market or where the money is going. It is not our business to
ask, and we
are now working 24-hour shifts to meet the set targets," said a
source at
the printers.
The source said the round-the-clock shift came
into play just before the
farm invasions got under-way.
"It is as if
government needed the money urgently. This has not been seen at
Fidelity
Printers that people go for three months on a 24-hour shift," the
source
said.
Since February, Fidelity has printed over $30 billion to service
the
government overdraft, over and above its target.
"In the past, the
printers would maybe work up till midnight to meet certain
set targets. If
the need arose, a 24-hour shift was effected, but it never
ran for more than
two weeks at most."
The central bank source said government usually
printed money against
available goods and services.
"This has now gone
out the window. We are printing money on the advice of
the powers that be,"
he said.
A spokesman for the RBZ said this week Fidelity Printers were
working normal
hours since February, with additional hours only on a need
basis. He denied
there was a marked increase in the need for
cash.
"Cash withdrawals and deposits from our customers have been normal.
However,
demand for cash is attributable to a number of factors, among
them
inflation, that is, the generalised increase in the price of goods
and
services," the RBZ spokesman said.
"Fidelity Printers does not
mint money to service government's overdraft. In
terms of the Reserve Bank
Act, we are the sole issuers of notes and coin in
Zimbabwe. For your
information, government overdraft is far less than the
figure suggested by
you," he said.
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