Zim money supply up 2,1%

Zim money supply up 2,1%
Published: 18 March 2014
Money supply marginally grew by 2,1% in January 2014, an increase of 0,7 percentage points from the average 1,4% recorded in the last quarter of 2013, latest central bank statistics show.

The Reserve Bank of Zimbabwe (RBZ) monthly economic review for January 2014 noted that the low growth in broad money, reflects the general economic slowdown, which has worsened the liquidity shortages in the economy.

"On a month on month basis, however, broad money declined by $43,7 million (-1,1%). The monthly decline was on the back of contractions of $88m in over 30-day deposits and $77,2m in savings deposits.

"Partially offsetting these declines were increases of $116,8m and $4,7m in demand and under 30-day deposits, respectively," read the review.

With the central bank incapacitated to influence liquidity levels in the economy, money supply levels have largely been reflective of the difficult balance of payments position.

The fragile growth in deposits continues to mirror the under-performance of the external sector.

During the month under review, money supply was made up of demand deposits, 53,4%; under 30-day deposits, 18,2%; over 30-day, 16,3%; and savings deposits, 12,1%.  Of the total money supply, government deposits constituted 3,6% ($141,8 million).

Annual growth in credit to the private sector, which has been on a downward trend, notwithstanding recording an average growth of 6,3% in the fourth quarter of 2013, further declined to 0,2% in January 2014.

On a month-on-month basis, credit to the private sector, declined by 2,3% from $3 650,1m in December 2013 to $3 566,6m in January 2014.

The slowdown reflects shallow lending by banks on the back of liquidity challenges, constrained deposit base and increasing nonperforming loans.

Claims on the private sector were in the form of loans and advances, 83,85%; mortgages advanced by building societies, 10,78%; bills discounted, 2,13%; bankers' acceptances, 1,09%; and other investments, 2,14%.

The outstanding loans and advances were mainly to households (18,70%), agriculture (18,46%), distribution (17,87%), and manufacturing (14,54%) activities.

Credit to the private sector was mainly utilized for asset purchases (44,20%) as well as inventory build-up (33,67%).

Loans and advances utilised for fixed investment activity have remained low, with the procurement of plant and equipment accounting for 3,52% and pre and post shipment financing at 1,09%, of total loans and advances.
- zimmail


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