Foreign currency shortages not new in Zimbabwe, says RBZ

A top Reserve Bank of Zimbabwe official has said the country has always had a shortage of foreign currency since the 1960s, but the latest crisis has been worsened by the domestication of the same currency which was in short supply.

This was said by RBZ deputy governor Kupukile Mlambo during a business conference at the Zimbabwe International Trade Fair today.

According to Mlambo, Zambia which has its own currency has more US dollars than Zimbabwe.

"As I speak right now Zambia, has more US dollars than us and they are using their own currency.

"Now imagine us who are using the same foreign currency both domestically and for foreign trade but we do not have the money," said Mlambo.

Mlambo told the guests that banks are holding only  2 %  of their liquid assets as cash, with more than 36 % in the form of real-time gross settlement systems (RTGS).

"Only 2 % of the banks' liquid assets in cash, that is notes and coins, and around 36 % in RTGS. The deposits that are being made are not cash but people want to withdraw cash.

" That is why we are saying people must adopt plastic money,".

"Ideally, the cash deposit ratio must be around 15 % but in Zimbabwe it has fallen to 4,8 %.

Mlambo accused businesses of not banking.

"When we dollarized in 2009, our cash deposit ratio was around 43 %. This was mainly due to Zimbabweans in the diaspora who were putting their cash into the economy.

" Around 2014, that is when people started siphoning money out of the economy, that resulted in our cash deposit ratio falling to 4,8 %.

"Our businesses are also not banking and that is a problem,".