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Zimbabwe: Cut Money Supply Growth - CZI
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 Published by the government of Zimbabwe |
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The Herald (Harare)
10 June 2008
Posted to the web 10 June 2008
Harare
The Confederation of Zimbabwe Industries has said money supply growth has to be reduced as a matter of urgency in order to control inflation and stop the free-fall of the local currency.
CZI president Mr Callisto Jokonya said if there is a continuous injection of massive amounts of liquidity into the economy "we will continue to see the weakening of the local currency".
"This will make doing business more difficult and we will reach a point where the local currency becomes unusable," Mr Jokonya said. If money supply continues to expand, prices of goods and services will also rise in line with the growth. Liberalisation was commendable, Mr Jokonya said as it had come at a time when the country is receiving foreign currency from tobacco and cotton proceeds Tobacco was estimated to bring in US$250 million and cotton at US$300 million. "We, as CZI, are totally behind the liberalisation; our members are totally behind the liberalisation," said Mr Jokonya. The foreign currency will facilitate the importation of raw materials aimed at improving capacity utilisation and tax revenue for the Government.
Mr Jokonya said CZI has received reports from various industry sectors of improved export performance as hard currency continues trickling into the formal market. He however said liberalisation and the growth in money supply did not correlate as it had resulted in the declining of confidence in the currency. "Already we are seeing in both urban and rural areas, small traders, landlords and individuals are refusing payment in local currency and insisting on either barter deals or foreign currency," Mr Jokonya said. In most cases landlords are charging 50 rand for a room or alternatively two litres of cooking oil, traders are selling cement at US$10 a bag while farmers are charging 20 rand for a bucket of maize.
CZI also deplored the travel bans on Government leadership by the Western community because of their serious repercussions on the economy.
"As private sector we are also concerned over the travel bans imposed on a wide spectrum of Zimbabwean leadership, as the consequences of the travel bans are clearly visible through the drying up lines of credit," he said.
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The World Bank, International Monetary Fund and the African Development Bank revoked financial support to Zimbabwe, a move that has led to foreign currency shortages.
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