Harare(New Ziana) -The government intends to release new higher denomination bank notes into the market to ease the prevailing cash shortages, a senior official said on Friday.
This follows the introduction of new $2 and $5 bank notes and coins this month by the Reserve Bank, which itself comes back on the heels of the re-introduction early this of the Zimbabwe dollar as the sole trading currency in the country.
This is part of the wider monetary reforms the government is pursuing which has seen the multi-currency trading system, dominated by the US Dollar, being phased out.
Finance and Economic Development permanent secretary, George Guvamatanga said higher denomination bank notes will be introduced progressively in order to carefully manage money supply in the market.
“There are actually other denominations that are on the way. But you see, you also want to manage money supply; you do not start by bringing in $500 notes and throw in one billion of that money into the market,” he said.
“We know that at the moment the money that is on the market is not adequate to meet demand, and hence the long queues and hence some of the trade that we have seen. But that will be for a very limited time and it will be addressed.”
Guvamatanga said Treasury was aware that the introduction of new $2 and $5 notes and coins did not quell the country’s cash shortages.
“The reality is that those coins had already been minted, so rather than throwing them away when we have got a shortage of notes, we just decided that lets bring them so that they will work alongside the new $2 notes and $5 notes while we bring in the bigger denominations.
“And as we bring the bigger denominations, some of the bond notes and some of those coins will start to be withdrawn from the market. We are very much aware of the requirements,” said Guvamatanga.
The central bank said over a billion dollars in new notes will be drip-fed into the market to avoid fuelling inflation.