eBusiness Weekly
Business Writer
Money supply growth inched up in March 2019, but rose at a slower rate than that of the previous month of February mainly on the back of more money chasing relatively fewer goods.
According to the RBZ, annual broad money supply increased by 2,29 percent in March to give a 38,14 percent rise for the year to March 2019 compared to 37,94 percent annual growth recorded in February, the Reserve Bank of Zimbabwe (RBZ) says.
Month-on-month broad money increased by 2,29 percent from $10,3 billion in March 2018 to $10,627 billion in March 2019, the RBZ said.
Money supply is the entire stock of currency and other liquid instruments circulating in a country’s economy as of a particular time.
The money supply can include cash, coins and balances held in checking and savings accounts.
The month-on-month growth for March is, however, lower than what was recorded in February where money supply grew by 5,4 percent.
Sustained decline in money supply growth will help in anchoring adverse inflation expectations currently driving up prices.
The broad money supply — such as banknotes and coins; shorter bank deposits, bank deposits redeemable at three months’ notice, money-market fund shares and debt securities maturing in two years — was driven by demand deposits and currency in circulation.
Prices rise when the supply of money grows too quickly — faster than productivity — because a situation arises where relatively more money chases relatively fewer goods.
“In levels, annual broad money supply increased from $7,693 billion in March 2018, to $10,627 billion in March 2019,” reads the 2019 Monthly Economic Review.
According to the RBZ, which last released money supply figures back in January 2019, the growth in money supply was reflected in demand deposits, which grew by 49,52 percent; currency in circulation, 37,09 percent; negotiable certificates of deposits, 3,63 percent; and time deposits, 3,62 percent.
Month-on-month, demand deposits accounted for 81.38 percent of broad money; time deposits, 13,52 percent; currency in circulation, 4,39 percent; and negotiable certificates of deposits, 0,71 percent.
The marginal increase in broad money also translated to slight growth in domestic credit.
Credit to the private sector recorded an annual growth of 6.92 percent to $3,9 billion in March 2019.
Month-on-month, credit to the private sector declined by 2,62 percent, from $4,0 billion in February 2019 to $3,953 billion in March 2019.
Private sector credit was distributed as follows: households, 25,75 percent; agriculture, 18,94 percent; services, 14,35 percent; distribution, 13,35 percent; manufacturing, 9,52 percent; financial organisations and investments, 7,74 percent; mining, 4,74 percent; construction, 3,09 percent; and transport and communications, 2,17 percent.
