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Fidelity ordered to print more money

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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