Simba Moyo
The Minister of Finance in Zimbabwe, Patrick Chinamasa, has attributed the current cash shortages that have resulted in the resurgence of long queues at banks to the high fiscal deficit.
The minister said the country is now living beyond its means through borrowing from the market by way of Treasury Bills, a government overdraft at the Reserve Bank of Zimbabwe.
He said that has contributed to the cash crisis.
“Further, government funds its employees’ salary accounts through electronic transfers, while on the contrary employees would want physical cash from banks. This misalignment is the greatest cause of queues at banks,” he told the House last Thursday.
He also said the non-banking of cash by traders is also partly to blame, saying some have been hauled to the courts for not banking sales proceeds in line with the laws of Zimbabwe, pleaded guilty now awaiting sentence.
Chinamasa said the government has since put in place strategies to deal with the situation, that include the advocating for the use of plastic money, a condition that preserves forex in Nostro accounts for use in foreign payments.
He said in order to reduce the cost of transacting using plastic money, the government is going to remove the 5 percent charged.
“The factors underpinning cash challenges are beyond banks, they found themselves in a difficult position where they are compelled to ration cash withdrawals,” he said.
But former Finance Minister Tendai Biti rubbishes Chinamasa’s blame that traders are also to blame for not banking their monies. He says ZANU PF government’s way of rule is solely to blame for the chaos.
“Why would any rational trader bank cash when one can’t get it out, the regime cannot therefore criminalise rational behaviour,” he queries.
He says economies are not run on coercion threats extraction and capture, an element that ZANU PF had failed to learn from despite repeated failures.
At the moment, the government’s employment cost is now taking 93 percent of tax revenue, with government’s legacy debt at over 40 percent of tax revenue, a situation that means expenditure is above revenue.
