Zim to import coins to ease shortages

via Zim to import coins to ease shortages 25 August 2014

THE Reserve Bank of Zimbabwe (RBZ) said Monday it would import special coins with similar value to those currently circulating in the economy to ease a shortage of change in the economy.

Ditching the local dollar ended hyperinflation and helped stabilise the country’s economy, and facilitated marginal recovery under the coalition government.

But Finance Minister Patrick Chinamasa recently admitted that the multi-currency regime was also to blame for the current economic slide because, among other things, “it pitched our cost structure too high and unsustainable”.

In his policy statement, RBZ governor John Mangudya, said the shortage of change has been cited as one of the reasons for the high domestic prices which have forced Zimbabweans to resort to imports.

“The most plausible reason given by the Retail Association of Zimbabwe, businesses and individuals across the nation for the discrepancy of prices in Zimbabwe and the rest of the world is lack of change within the economy to the extent that sweets and tokens/vouchers are issued as change to the general public,” said Mangudya.

“Barter trade is also in use especially in the rural areas. In order to ameliorate this problem of change and it’s unintended consequences on the price levels in the economy, the Reserve Bank shall be importing special coins of 1c, 5c, 10c, 20c, and 50c whose values would be at par with the US cents.

“Rand coins of 10c, 20c, 50c, R1, R2 and R5 are also being imported to buttress the multiple currency system which is dominated by US$s and Rands.

“These coins would be distributed to business through normal banking channels from the Reserve Bank. The Bank through its Bank Use Promotion Unit shall monitor that the coins are utilised as change to bring decency in the economy.”

Mangudya also noted the severely constrained macro-economic environment prevailing in the country characterised by a serious liquidity crunch, and called for prudent use of the little financial resources available and improved economic production to turn around fortunes of the economy.

The government had projected the economy to grow by 6 percent this year but it has since cut the growth forecast to 3.1 percent due to subdued economic activity.

Lack of long-term capital and foreign direct investment partly due to the country’s indigenisation policy requiring foreigners to transfer majority shareholding to blacks, has been blamed for the low foreign financial support to help revive the faltering economy.