By Daniel Itai.
(News of The South) – As Zimbabweans are ushered into yet another era of new bank notes, some chief economists have slammed the move citing it as a total catastrophe for the Zimbabwean economy.
Today the Reserve Bank of Zimbabwe (RBZ) dispensed to the general public $2 and $5 Bond notes in a move that is meant to curb cash crunches and subsidise premium rates.
RBZ Governor Dr. John Mangudya said measures had been put in place to counter the channelling of cash from banks to the black market and the locking up of the new cash into the informal sector.
“Money moves from formal to informal sector, it gets trapped there, so it means we need to make sure that the economy is formalised. We need to improve production to grow the circle of the formal sector. We need to address the structural challenges.
Our teams will be on the ground to ensure that compliance is done. We also need to ensure that shops that receive cash bank it in line with the Bank Use Promotion Act. Big outlets will be monitored,” said Mangudya.
However, Tony Hawkins a professor of business studies at the University of Zimbabwe said, “the new cash will not resolve the economic problems we face. What it means is that we will probably have more cash around to feed the black market for currency.”
Zimbabwean economist Vince Musewe also shared the same sentiment, “increase in hard cash will lead to more speculative economic activity led by informal sector resulting in more demand for the US dollar leading to the US dollar rate increasing and more inflation.”
The introduction of new notes and coins is expected to increase the amount of cash in circulation from about $855 million to almost $1,9 billion.
Yesterday commercial banks collected $30 million of the new notes from the RBZ.
Weekly cash withdrawal limits are still set at $300 (approximately US$18.75).
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