Zim$ too insignificant to trigger inflation- Mthuli Ncube
By Thandiwe Garusa
Finance Minister Mthuli Ncube argued that the Zim$ is in short supply and cannot be a factor among the causes leading to rising inflation.
Speaking to the media at a post-ministerial briefing, Ncube refuted claims that the Treasury is partly responsible for creating excess money in the form of payments for infrastructure projects.
Some experts believe that the huge payments made to contractors end up being used to chase after the few US dollars in the market, driving up exchange rates in the parallel market.
“We have taken two key steps to pay contractors using the following formula: 50% in US dollars, SD and 50% in Zimbabwean dollars, so it is not in Zimbabwean dollars at all.
“On the Zimbabwe dollar part, we are smoothing it out, it’s not paid all at once to make sure it doesn’t end up as a lump sum in the parallel market,” Mthuli said.
Mthuli added: “Dear colleagues, the Zimbabwean dollar is in short supply, if you get zero percent growth in demand it means the currency is not in abundance, it is in short supply.
“So what’s driving the exchange rate is the speculative behavior of the monopolies that we’ve seen.
“As we’ve said before, as a 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 square.
The Zimbabwe National Roads Administration (ZINARA) has spent a lot of money on infrastructure projects aimed at road rehabilitation since last year.
This year alone, the road administration has disbursed $17 billion to several local authorities.
Economic experts have questioned the source of these funds amid speculation that the funds could be a product of money creation.