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'$200m in cash barons' hands'

by Staff reporter
30 Jul 2017 at 08:02hrs | Views
THE Reserve Bank of Zimbabwe (RBZ) has imported over US$$400 million cash since January this year to address the cash shortages but of that amount only less than US$200 million is in circulation.

According to the RBZ Governor Dr John Mangudya, about US$200 million was locked up in cash barons' hands who are hoarding money while part of it was externalised.

The country has long been facing cash shortages as about US$600 million is needed to meet cash demands.

The central bank is encouraging the transacting public to use plastic money and mobile money transfers to ease the high demand for cash.

So far $175 million worth of bond notes have been injected into the economy to incentivise exporters and ease cash shortages.

Dr Mangudya said: "We have imported over US$400 million in the past seven months to ease the cash shortages. We will continue importing between US$15 million and US$20 million per week.

"But lack of discipline (which include cash hoarding, capital flight and high rates) in the local economy is dampening our efforts to oil the market and turn around the economy."

He explained that importing cash was not an overnight process as banks were subjected to Customer Due Diligence (CDD) by their correspondent banks abroad. A correspondent bank is a financial institution that provides services on behalf of another.

Dr Mangudya dismissed claims that bond notes and US Dollar notes were shipped out of the country, adding that there was more cash flowing in the informal sector.

"We still have a lot of physical money but it's in the informal economy. Cash is not circulating and this is a cause for concern. This is what is called rent seeking behaviour which is not a normal practice," he said.

"Due to this rent-seeking behaviour people want to do arbitrary transactions where they cash in on the shortage of forex. We call for behaviour change and fiscal discipline.

"If banks are doing it, we call it abuse of office and if it's done by business or traders its poor corporate governance.

''We will compel the banks using the Bank Use and Promotion Act."

RBZ is pushing for fiscal consolidation and improving the investment climate and promotion of free banking to promote high levels of production.

There has been growing for the setting up of a Commercial Crimes Court, which awaits Cabinet approval, to deal with corruption and illicit financial flows.

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