It has been almost 2 weeks since the new ZWL$2 coins and notes were injected into the market. As much as this was part of moves to ease cash shortages no significant change has been realized as cash shortages continue to rage on. There have also been somewhat unclear reasons as to why the ZWL$2 coins and notes were realised to function alongside each other. The other interesting things also is that the new ZWL$2 coins are inscribed 2018 which suggests that these coins were somehow meant for release last year. Interesting to note again is the fact that the new ZWL$2 notes seem to just be bond notes without the inscription ‘bond note’. Not also forgetting that the ZWL$5 ones were introduced and are now in circulation. Anyways, my focus in this article is the indication by the government that higher denomination notes are on their way.
ZWL$10, ZWL20 And $ZWL$50 Notes Set Be Introduced Soon
The government has indicated that they shall be introducing these new higher denominations notes soon. This was said by the Permanent Secretary for Finance and Economic Development, George Guvamatanga. This will be aimed at alleviating the current cash shortages that are still persisting. He highlighted that they shall be injected into circulation using a phase by phase approach. This will be to exercise control and effectively manage the money supply dynamics. He admitted that the current money supply is not enough to exhaustively with the demand. This is evidenced by the long queues for cash withdrawals that still persist. He even pointed out that they are quite aware that the recently introduced ZWL$2 and ZWL$5 notes and coins have not done much to alleviate the prevailing cash shortages. He, however, gave an assurance that the cash shortage problems will be decisively tackled soon.
Other Interesting Things Mr Guvamatanga Mentioned
Earlier I spoke about how that the coins seem to have been earmarked for release last year. Well, that is actually so, because he pointed out that the reason why they got injected into circulation was because they had already been minted. Thus it was pointless to get rid of them but rather inject them since cash shortages are prevalent at the moment. He also indicated that as the higher denominations come along some of the bond notes and coins will be phased out. He said this shall be done following due processes as prescribed by the set regulatory stipulations. At least ZWL$1 billion worth of new notes is set to be injected into circulation bit by bit. This, of course, will be to endeavour to curtail possibly catalysing inflation.
A Few Thoughts
It is not surprising for people to feel that we might be slowly retrogressing to the 2008 era. Remember the government is majoring on symptomatic issues because the underlying aspects causing economic turmoil are not being addressed. So it is really possible for what happened with the ZWL$2 and ZWL$5 notes and coins to happen again with these promised higher denominations. Despite coming to a point where all the ZWL$10, ZWL$20 and ZWL$50 are in circulation, cash shortages might still be the order of the day. Inflation is still spiking and exchange rates are still spiking so introducing new higher denomination will just be like chasing the wind. By the time we get to the introduction of the so-called higher denominations, they might not be as high per se.
The other disruptive issue regard the hoarding of cash. You will remember that cases of that emerged at the very introduction of the ZWL$2 notes and coins. Though some banks were blamed it really is just window dressing because we all know that hoarding of cash is happening on a grand scale. So even if higher denominations are injected that might not do much to address the cash shortages. After all, printing money is a big cause for inflation (an illness already ripping the economy into pieces). For those of you who remember the 2007/2008 era it all started with the introduction of higher denominations and things got out of hand till the Zimbabwean dollar had to be abandoned. It almost feels like the economy is locked in some perpetual loop.
The fact that porous solutions are being devised, to address symptoms for that matter, is quite disturbing. Zimbabwe heavily imports as opposed to exporting because most local industries are struggling or closed. We have a colossal agricultural and also a mining industry, amongst others, which have the capacity to make this economy abound. Sadly, fundamental principles are being ignored at the expense of corruption and empathy for the struggling majority of Zimbabweans.