Minister explains cash shortages
FINANCE Minister Tendai Biti yesterday said cash shortages affecting some financial institutions were spawned by an unexpected surge in demand and not a result of liquidity problems.
Since last week, scores of people have failed to access cash at most banking halls bringing back memories of last year when getting money from banks was a nightmare with many people spending nights at their banks.
"The problem that has been happening there is that banks have been overwhelmed by demand from people. It is not a liquidity problem.
Civil servants and those from the private sector were paid bonuses and some have closed for the holidays today so all the people are at the banks," said Minister Biti.
The hyperinflationary environment that existed last year made it difficult for the RBZ to satisfy demand for cash from the public as prices continuously rose.
The increase in the prices also resulted in an increase in the demand for cash.
The queues have, however, disappeared following the adoption of the multiple-currency system that came into effect in February this year.
Zimbabwean consumers have again found themselves waiting in long lines to withdraw cash from banks in the cities of Harare, Bulawayo and Mutare amid preparations for what is shaping up as the best Christmas in years following formation of a unity government and stabilization of the economy.
Eyewitnesses said most banks, especially building societies – savings and loan institutions to U.S. consumers – were unable to meet demand leading some customers to sleep outside banks to keep their place in line.
Reserve Bank Governor Gideon Gono blamed the cash crisis on the Treasury, under the control of his arch-rival, Finance Minister Tendai Biti, which he said had under-funded the central bank, leaving it without the capacity to serve as lender of last resort to the nation’s financial institutions.
But economist Prosper Chitambara of the Labor and Economic Research Institute of Zimbabwe told our reporter that there was little the Treasury could do because there is simply not enough hard currency in the country to meet expanding financial, business and consumer needs.
Zimbabwe officially abandoned its own debased currency early this year amidst stratospheric levels of inflation and adopted a monetary regimen of mixed hard currencies including principally the U.S. dollar and South African rand.
The shift quickly vanquished hyperinflation but with hard currencies paid out to foreign suppliers of essential goods and reviving economic activity demanding more currency in circulation, cash shortages have become chronic