Martin Kadzere Senior Business Reporter
Finance and Economic Planning Minister Patrick Chinamasa, on Friday said the prevailing cash shortages will not disappear “overnight”, and urged people to be patient as Government starts implementing measures to address the shortage of banknotes.
He also hinted that Government may consider building gold stocks to back up the local currency in the event it decides to reintroduce it. Addressing the 2018 post-budget seminar organised by the Confederation of Zimbabwe Industries, Minister Chinamasa said the shortage of cash had largely emanated from high level of expenditure of Government and widening budget deficit being funded through Treasury Bills.
The TBs had resulted in excessive “printing” of money and this had driven real money out of circulation and replaced it with bank balances, Minister Chinamasa said.
“There will be no quick fix to the cash shortages. . . it will happen but not overnight. That is why we need to increase exports and keep an eye on imports coming into the country,” said the minister. Zimbabwe has grappled with cash shortages since April last year with authorities blaming externalisation, the hoarding of cash and depressed exports and low foreign investment.
It is understood that about $3 billion was externalised from Zimbabwe since 2015 and the Government has since granted a three-month moratorium within which individuals and corporates that externalised the money and assets are expected to bring them back. The amnesty stretches from December 1 to February 28, 2018. The Government will neither ask questions nor prefer charges against those that will be repatriating the money.
In his inauguration speech on November 24, President Mnangagwa pledged to resolve the country’s cash shortages. “In the immediate, the liquidity challenges, which have bedevilled the economy must be tackled head-on and must be dealt with as a matter of urgency.”
“People must be able to access their earnings as and when they need them,” Mnangagwa said. He said the Government would expedite relations with the “countries who control the global financial markets’.
Minister Chinamasa said while it would be imperative to address economic fundamentals necessary to re-introduce the local currency, the Government may also looking at building gold reserves to back up the Zimbabwean dollar.
“That is where my mind is going. Meanwhile industry welcomed Minister Chinamasa’s budget, describing it as “business and investor friendly,” said Minister Chinamasa. While there would be some areas needing public and private sector dialogue, business leaders said the fiscal policy had positively responded to most of the challenges facing the economy. Minister Chinamasa assured policy “consistency and predictability” while challenging the business to play its part.
“We have made clear the direction the economy is going; supporting infrastructure, re-orenting the budget, supporting productive sectors and there is convergence on that. We are creating conducive environment for you the economic players and investors and the ball is on your court.”