Harare,— Zimbabwe is grappling with a severe cash shortage exacerbated by the recent introduction of the Zimbabwe Gold (ZiG) currency, disrupting various sectors of the economy and raising concerns about the government’s monetary policies.
The Reserve Bank of Zimbabwe (RBZ) rolled out ZiG notes and coins on April 30, replacing the depreciating Zimbabwe dollar. However, the transition has been marred by a scarcity of cash, impacting sectors such as transport, supermarkets, and the informal market.
Economists have pointed fingers at the central bank, attributing the cash crunch to what they deem as incompetence in managing the supply of ZiG currency. Gift Mugano, an economist, criticized the RBZ for not printing sufficient ZiG notes and coins to meet market demand, stressing the need for adequate denominations to alleviate the shortage.
Mugano warned of the risk of increased dollarization if the cash scarcity persists, emphasizing the unintended consequences of the RBZ’s monetary policies. He highlighted the importance of maintaining a balance between liquidity and inflationary pressures.
Echoing similar sentiments, economist Prosper Chitambara suggested that the RBZ might be adopting a cautious approach to prevent excessive liquidity in the economy, which could fuel inflation. However, he underscored the need for the central bank to address the supply-demand imbalance for ZiG currency promptly.
Fanwell Mutogo, CEO of the Bankers Association of Zimbabwe, acknowledged the challenges faced by banks in meeting customer demands for cash but emphasized the importance of promoting digital transactions as part of a broader push towards modernization and efficiency.
The introduction of ZiG marks Zimbabwe’s sixth attempt to establish a stable local currency since the tumultuous period of hyperinflation that led to the collapse of the Zimbabwe dollar in 2008.
However, the current cash shortage underscores the challenges in implementing effective monetary policies to restore confidence in the domestic currency.
