Zimbabwe: Zim$ Too Insignificant to Trigger Inflation - Mthuli Ncube

Finance Minister, Mthuli Ncube has maintained that the Zim$ is in short supply and cannot be a factor among the causes leading to the rise in inflation.

Speaking to the media during a post cabinet briefing, Ncube refuted claims that the treasury is partly responsible for the creation of surplus money coming in the form of payments for infrastructure projects.

Some experts believe that the huge payments extended to the contractors end up being used to chase after the few US$ in the market, in turn pushing up exchange rates on the parallel market.

"We have taken two critical steps, to pay contractors using the following formula: 50% in Unites States dollars, SD and 50% in Zimbabwean dollars, so it is not in all in Zimbabwean dollars.

"On the Zimbabwean dollar portion, we smooth it out, it is not paid all at once to make sure that it does not find its way as a lumpsum into the parallel market," Mthuli said.

Mthuli added: "Colleagues the Zimbabwean dollar is in short supply, if you get zero percent growth in demand supply then this means the currency is not in abundance, it is in short supply.

"So, what is driving the exchange rate is speculating behaviour from the monopolies that we have seen.

"As we have stated before, as government we need both currencies going forward because the USD is what gives us the virtual or surrogate balance of payment, the mechanism that we currently have in place.

The Zimbabwe National Roads Administration (ZINARA) has spent a lot of money on infrastructure projects targeting roads rehabilitation since last year.

This year alone, the roads authority disbursed $17 billion to several local authorities.

Economic experts have queried the source of such funds amid speculation that the funds could be a product of money creation.

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