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Minister Patrick Chinamasa

Business Reporter
FINANCE and Economic Development Minister Patrick Chinamasa says bank deposits have increased to $7.2 billion and encouraged Zimbabweans to continue using plastic money to address the prevailing cash shortages.

In the 2017 monetary policy statement, Reserve Bank of Zimbabwe Governor Dr John Mangudya indicated that as of December 31, 2016 total bank deposits amounted to $6.51 billion.

Speaking in Parliament last week, Minister Chinamasa said: “Plastic money is not a challenge. In our country, the deposits in the banks amount to $7.2 billion so it is impossible for us to give $7.2 billion in physical cash of United States dollars.

“For us to get US dollars, we get it through exports and when we get that money, we then use that money to buy more cash from the Federal Reserve Bank in America,” he said.

Zimbabwe started experiencing foreign currency shortages early last year largely due to illicit financial flows such as money laundering and externalisation.

“The money that we are supposed to buy fuel with, we are now buying money for you to use. What I am saying is that each country says about 10 percent to 15 percent of bank deposits should be in physical cash, is that not the case?

“Now, when we look at it, we realise that what is in circulation is in line with about 11 percent but because of people who are taking money and hoarding it, it is no longer in circulation,” said Minister Chinamasa.

He said cash shortages that started last year were mainly as a result of people hoarding the cash.

“Right now money is not circulating because some people are hoarding the cash. We have taken some companies to court for not banking money since 2009 despite making millions.

“Those are issues that we are looking into. The main challenge is for people to change their mindset. Remove this mindset that you need to buy everything in cash,” said Minister Chinamasa.