adminMoney supply in the economy increased by 89,6 percent from $10,4 billion in March 2019 to $19,7 billion in August 2019, Finance and Economic Development Minister Mthuli Ncube revealed in his 2020 Budget Statement presented last week.
Money supply is the total value of money available in an economy at a point of time. Too much of it in the absence of increased production is inflationary.
According to the 2020 Budget Statement the annual increase in money supply was largely attributable to growth in transitional deposits of 126 percent, time deposits of 99,5 percent and Negotiable Certificate of Deposits (205,2 percent).
Meanwhile, currency in circulation denoted by bond notes and coins increased by 53,5 percent from $484,8 million in August 2018 to $744,9 million in August 2019.
“Therefore, the growth in cash is lower than the growth in money supply, exacerbating the cash shortages in the banking system,” reads part of the 2020 Budget Statement.
Minister Ncube acknowledged that the cash shortages had resulted in long and unending queues at banks, high cash premiums against electronic money and multiple pricing. He said this would be resolved through the injecting adequate cash into the economy to meet transactional requirements of the public as was done starting from last week. — Business Reporter.
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