Introduction of high value banknotes won’t worsen inflation: Analysts

13 Jan, 2021 - 12:01 0 Views
Introduction of high value banknotes won’t worsen inflation: Analysts Mr Trust Chikohora

The Chronicle

Oliver Kazunga, Acting Business Editor

THE introduction of high value denominations into the economy will not exacerbate higher levels of inflation as long as the Reserve Bank of Zimbabwe (RBZ) does not print too much money.

Economic commentators said this in separate interviews following proclamation by RBZ that it is working on introducing a Z$50 banknote into the market to increase physical money supply, curb cash shortages and improve transacting convenience.

At present, Zimbabwe has Z$2,Z$5,Z$10 and Z$20 banknotes in circulation.

Economic commentator Mr Trust Chokohora who is also the Political Actors Dialogue economic committee chairperson said printing of high value denominations is a step in the right direction as the country at the moment has smaller denominations, which are inconviniencing the transacting public.

“As to whether it becomes something that leads to greater inflation or not, that will depend on the value of the notes that will be printed and value that will be in circulation,” he said.

RBZ Governor Dr John Mangudya Tuesday this week said they were printing only Z$50 banknotes and not Z$100 and Z$200 banknotes.

“Overally, you will find that they (RBZ) are likely to drip-feed  these notes to try and avoid exercabating inflation,” said Mr Chikohora.

According to the Zimbabwe Statistics Agency (Zimstat), the country’s annual inflation for 2020 stood at 348,59pc.

Added Mr Chikohora: “Its just something that will help in terms of people being able to transact a bit more easily but if they (monetary authorities) don’t print too much if it into the market, it is unlikely it will create higher levels of inflation by itself only.”

A financial market analyst, Mr George Nhepera said of late Zimbabwe’s inflationary pressures largely emanated from unregulated mobile money services sector and unstable foreign exchange market.

“These are now under control hence, it’s time to bring in higher denominations, like we find in other countries in the region, for the convenience of the general public including the business sector,” he said. – @okazunga

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