BLESSING MADZIWANZIRA
FINANCE Minister, Mthuli Ncube, has indicated that the injection of new notes next week will reduce cash shortages on the market as well as to reduce prices of goods and services.
Zimbabwe’s ailing economy has been battling skyrocketing prices of goods and services resulting in hyperinflation.
The Public Accountants and Auditors Board, a body that regulates the accountancy profession in Zimbabwe, has since issued a directive to the preparers of financial statements that the country has plunged into hyperinflation and they should start applying International Accounting Standards 29.
It states that conditions for hyperinflation have been met. Speaking at the post Cabinet briefing last week, Ncube said: “All that is happening practically is a cash injection, that is absolutely needed to ease cash shortages and also to reduce transactions cost for accessing cash which also reduces prices of goods.”
But, economic analyst Trust Chikohora does not agree with Ncube. Chikohora told the Business Times that the introduction of new notes will not change anything but will just help to reduce cash shortages as well as reducing premiums being charged for cash.
“New notes will not change anything fundamentally. It will just help to reduce the shortage of cash,” Chikohora said.
“This will reduce the premiums being charged for cash as well as the gap between the exchange rate for cash and that for RTGS. These are benefits that may accrue.”
Central bank chief John Mangudya last week said the new notes and coins will be introduced in denominations of $2 and $5 as well as $2 coins to avoid larger denominations that may lead to inflation.
Mangudya revealed this following the inaugural Monetary Policy Committee meeting held on Monday and Tuesday, which tabled a number of resolutions aimed at consolidating the recent country’s monetary policy reforms.
