Another cash crisis looms in Zim – MDC

Another cash crisis looms in Zim – MDC

THE  MDC  led by Morgan Tsvangarai has expressed deep concerned with the Zim’s  cash crisis that is slowly but surely developing in the country, warning that if allowed to continue it will result in shortage of goods and petrol queues will resurface.

In a statement released today, the opposition party says  the RTGS system of money transfers, which dominates the domestic and international payments system and handled US$45 billion dollars of transfers in Zimbabwe last year, has suddenly slowed with banks curtailing transfers and delaying payments to suppliers and clients, while money dealers on the street, are offering cash at a premium ranging up to 10 per cent and discounting Rand by a similar margin.

“All of these developments point to an emerging cash crisis which is likely to be  worse in the next few weeks. The implications are very serious – clients will be scared that their banks may be on the edge of failure – “even if, from a technical point of view, they are sound financially,” warns the MDC.

The Party also says bank clients who are trying to get cash for their  day to day needs  at banks are having their daily limits reduced

“Some Banks can’t  supply US dollars in cash and instead are offeing the South African Rand. When they do so clients must pay for the cost of exchanging Rand for USD balances and then when they try to use the Rand in local markets, they find that they are offered goods at a significant premium to the USD prices,” says the MDC.

“Meanwhile the business community is can no longer  pay their suppliers even if they have enough funds in their banks and if  this continues, shortages of goods will start appearing and queues might develop for fuel,” adds the Party.

The party also alleges that  with State  revenues  now falling  below the monthly cost of employment, Government is desperately mopping up all sources of liquid cash in the economy to the detriment of all other stakeholders.

“It is rumored that the Ministry of Finance is using cash balances in the Reserve Bank’s RTGS accounts to meet its own cash needs and that this is the main explanation for the current slowdown in the RTGS system,” it says blaming the situation  on a  sharp decline in confidence in Zim,  linked to the deteriorating political situation and the government ‘s inability to  deal with the  infighting  within Zanu PF and the rampant corruption in all State controlled entities. – Patience Rusere