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Zimbabwe: New Cash Withdrawal Limits Hailed
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 Published by the government of Zimbabwe |
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The Herald (Harare)
26 March 2008
Posted to the web 26 March 2008
Harare
BANKERS have applauded the move by the Reserve Bank of Zimbabwe governor announced at the weekend to increase maximum cash withdrawal limits to $5 billion from $500 million as well as the cheque limit to $50 billion.
Dr Gono said contingency plans had been put in place to ensure "we do not relapse into the era of cash shortages" after bank queues started mushrooming towards the end of last week as depositors withdrew salaries ahead of the Easter break.
Bankers have said that the new limit to be in effect on April 4, would help depositors avoid the queues in front of bank counters and the ATMs.
An official from CBZ Bank said the $500 million is "too little an amount in the current hyperinflationary environment as most depositors are making several trips to the bank in order to raise just $2 billion".
Most companies and some individuals had resorted to opening several accounts at one bank in order to reduce the trips to the bank. Moreover $500 million is not enough to cover even two weeks of transport costs.
The consumer basket and poverty datum line were last put at $1,2 billion with independent estimates currently at $3,5 billion.
However, some were of the opinion that the central bank chief should have raised the amount to $20 billion as the $5 billion would have eroded in value by end of April.
A higher amount, however, especially at the ATMs would mean that cardholders would have to spend more time at the machines.
"The longer time you spend at the ATM, the more risk you will experience if the card is lost or stolen" said an analyst with a local bank. The central bank would also need to keep the limits at reasonable levels to avoid illegal money deals.
Dr Gono urged banking institutions to ensure that branch networks countrywide are "well stocked with cash to avoid needless inconveniences".
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According to the RBZ, surveys indicate that high inflation and frequent salary adjustments tend to accelerate the demand for cash, as employees would want to immediately convert their earnings into cash to allow them to buy goods and services.
The learning point from this is to continuously align cash withdrawal limits to anticipated changes in prices.
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