Zim cash crisis worsens

Source: Zim cash crisis worsens – DailyNews Live

Ndakaziva Majaka      5 April 2017

HARARE – Zimbabwe’s severe cash crisis is worsening, forcing banks to
reduce further their daily withdrawal limits – in addition to suspending
dispensing money through Automated Teller Machines (ATMs).

This prompted analysts who spoke to the Daily News yesterday to say that
this confirmed that the local economy was dying and “hurtling towards
total collapse”.

It also comes as most banks are now disbursing a maximum of $30 dollars a
day, down from their usual $100 – while those that had capped the maximum
withdrawal limit at $500 a week have pulled this back to $200.

The cash shortages are also continuing to worsen despite the recent
opening of the tobacco marketing season, where more than $47 million worth
of the leaf has so far been sold.

Economic advisor to President Robert Mugabe, Ashok Chakravarti, told the
Daily News yesterday that the escalating cash crisis was a result of
“long-term problems” that came after the country opted to have one of the
world’s strongest currencies, the US dollar, as its anchor currency.

“We have close to $6,5 billion in deposits and at the end of January we
had a little over $300 million in cash circulating.

“Under such circumstances, it only makes sense that we have shortages. Do
not blame the banks, it is not their fault, they are only looking for a
coping mechanism,” Chakravarti said.

He recommended that the government should adopt the South African rand and
ditch the dollar.

“I have said this before, we need a weaker currency. The weaker, the
better for us. As South Africa has just been downgraded, this is an
opportune time. What we just need is a weaker currency,” he added.

Veteran economist John Robertson said the cash problems were going to
persist until the government urgently fixed the country’s economic
fundamentals.

“This has been going on for the past year and in my view, the situation is
not likely to improve in the near future because economic fundamentals
remain the same.

“Government’s wage bill still makes up the majority of deposits and as
soon as those deposits are recorded, civil servants want to withdraw the
money. But there is essentially no money in the system . . . Not even
tobacco earnings will save us this time” Robertson said.

The Reserve Bank of Zimbabwe (RBZ) increased the bond notes withdrawal
limit from a maximum of $150 a week to $100 per day, and $300 per week
towards the end of last year.

It has so far injected $102 million worth of the surrogate currency into
the system.

The cash shortages come as there are growing fears that the country’s
economy may soon hit the disastrous lows of 2008 – as bond notes continue
to lose their value against the United States dollar, with the coveted
greenback now almost completely unavailable on the open market.

At the same time, economists have previously told the Daily News that
poverty levels in the country are skyrocketing, with average incomes now
at their lowest levels in more than 60 years – and with more than 76
percent of the country’s families now having to make do with pitiful
incomes that are well below the poverty datum line of more than $500.

Mugabe and his warring ruling Zanu PF, in power since Zimbabwe’s
independence from Britain in 1980, stand accused of turning the
once-thriving local economy, which at one time was regarded as the bread
basket of Africa, into a much-derided basket case.

COMMENTS

WORDPRESS: 5
  • comment-avatar
    Joe Cool 5 months

    We are already using the weakest currency – the Zim dollar/bond note. Nothing could be weaker than that, but it is still going to be downhill all the way to the very bottom, as we have the weakest-minded government on the planet, who still cannot realise where we are headed.

  • comment-avatar
    Ann 5 months

    Zanu pf need to throw in the towel, they are a greedy bunch. They only want to get to the next and the next election, that is the only aim. The economy will never be addressed.

  • comment-avatar
    Michelle 5 months

    But didn’t the crocodile insist that the banks should just produce the money required?

    Maybe he hasn’t been to the bank recently ?

    • comment-avatar
      Joe Cool 5 months

      Why go to the bank when you have access to the Treasury?

  • comment-avatar
    Karon Dahmer 5 months

    I believe John Robertson. The best economist in Zimbabwe. I have followed his work since 1985 and he has been right about the consequences of every disasterous fiscal and monetary policy instituted by Zanu-PF. How can Zimbabweans even consider voting for greedy, failed politicians like Mujuru and that old, venal Crocodile? The beasts are now eating themselves. Time for voters to act like turkeys – don’t vote for Christmas!