Zimbabwe says it is not printing money secretly

The Reserve Bank of Zimbabwe today denied that it is printing money secretly which is reported to have been one of the major reasons for the fall in the local currency against the United States dollar.

The Zimbabwe dollar was trading at par with the United States dollar until October 2018, but was devalued to 2.5:1 in February last year before being allowed to float on the interbank market.

It is currently trading at 18:1 but is down to nearly 32:1 on the black market.

The Financial Times of London said the money-printing scheme was designed to incentivise gold exports but hastened a decline in the local currency.

It said the secret money printing had derailed efforts to revive Zimbabwe’s economy and now threatened to end International Monetary Fund oversight of the government’s reform drive.

The paper said that the subsidy has now been stopped and a plan to continue monetary reforms without IMF is being crafted

The RBZ said the story was malicious and misleading.

“The article is calculated to tarnish the image of the bank, and ultimately that of the country and its leadership,” the central bank said.

It said the growth in money supply was due to subsidies on fuel, electricity, grain and government expenditure and not the gold incentive scheme.

The central bank also said the gold incentive scheme, which is funded by the government and was budgeted for had not been discontinued.

“The decline of the value of the local currency was largely due to various factors including low business and consumer confidence, low production levels within the economy and the impact of macroeconomic shocks such as the drought and Cyclone Idai,” the bank said.

It said it was committed to maintain reserve money growth to 10-15 percent by the end of 2020 and would ensure that month-on-month inflation remains at single digit levels.

Zimbabwe suspended the publication of year-on-year inflation in July last year but is expected to resume this month.

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