Full statement:
Friday, 18 March 2016
Zimbabwe facing a cash crisis
The MDC is deeply concerned with the debilitating cash crisis that is slowly but surely developing in the country.
The main topic of discussion among business people these days is the rapidly evolving cash crisis. The RTGS system of money transfers, which dominates the domestic and international payments system and handled $45 billion dollars of transfers in Zimbabwe last year, has suddenly slowed with the Banks curtailing transfers and delaying payments to suppliers and clients.
Clients attempting to secure cash for day to day needs are now confronted with reduced daily limits at ATM's and tellers in Banks. Some Banks are unable to supply US dollars in cash and instead offer the South African Rand. When they do so clients must pay for the cost of exchanging Rand for USD balances and then when they attempt to use the Rand in local markets, they find that they are offered goods at a significant premium to the USD prices.
On the street, money dealers are offering cash at a premium ranging up to 10 per cent and discounting Rand by a similar margin. All of these developments point to an emerging cash crisis which is likely to be worse in the next few weeks. The implications are very serious – clients will be fearful that their banks may be on the edge of failure – even if, from a technical point of view, they are sound financially. The business community is discovering that they cannot pay their suppliers even if they have ample funds in the Banks. If this continues, shortages of goods will start appearing and queues might develop for fuel.
The reasons are technical and are linked to a sharp decline in confidence in Zimbabwe and fears of an impending collapse. The reasons are linked to the deteriorating political situation and the almost complete failure of the Government to get to grips with the infighting in Zanu PF and rampant corruption in all State controlled spheres of activity.
With revenues to the State now below the monthly cost of employment, Government is desperately mopping up all sources of liquid cash in the economy to the detriment of all other stakeholders. It is rumored that the Ministry of Finance is using cash balances in the Reserve Bank's RTGS accounts to meet its own cash needs and that this is the main explanation for the current slowdown in the RTGS system. However at its roots is simply a total absence of confidence and this can only be addressed by a change in government. The beleaguered and faction-ridden Zanu PF regime simply has no solutions to the myriad problems that the country is currently facing. Only a legitimate and democratically elected government will be in a position to extricate millions of Zimbabweans from the life penury and deprivation that they are presently experiencing.
MDC: EQUAL OPPORTUNITIES FOR ALL
See also:
Chinamasa says government is not to blame for the current power shortages, it is an act of God
Tsvangirai warns Zimbabwe can implode any time putting entire SADC at risk
Former minister says our economic policies make it appear as if we admire poverty
Chinamasa admits Zimbabweans are overtaxed
Mangudya says banks have money but they are now too scared to give it out
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