Money Supply (M3) rises to $17.1 billion in July 2019

 Money Supply (M3) rises to $17.1 billion in July 2019
Published: 18 October 2019
The Reserve Bank of Zimbabwe released its monthly economic review documents for July 2019. The publication gives a general overview of a wide range economic statistics. The monetary statistics are a key highlight, particularly since restricting liquidity has been a key thrust for the current administration.

The reported figures suggest the monetary tightening efforts are losing steam, with a noticeable rise in the broad money (M3) following a moderate decline in the months leading up to April 2019. The recent accelerated exchange rate depreciation has cast a spotlight on the RBZ's monetary policy management as economic observers have looked for a rationale behind rate movements. The general line of thought has been that the government has once again resorted to money creation to plug its funding gaps as significant foreign credit remains elusive.
According to the statistics, at the end of July broad money supply (M3) was at $17.1 billion, up 16% from June, up 74.9% from October 2018 and 82% from July 2018. The RBZ attributed the growth to rising foreign currency deposits combined with the depreciation of the exchange rate. The statistics show there was growth in the domestic balances, which rose by 20% to $12.9 billion during the month, while the reported foreign currency balances only rose by 4% in nominal terms and fell by 25% in real terms (according to the exchange rates used by the RBZ).
The monetary base, which indicates the amount of currency in circulation amounted to $4.06 billion at the end of July 2019, up 13.5% from the end of June, up 42% from October 2018 and 45% from July 2018.
Other information disclosed indicated that the Reserve Bank's net foreign assets position worsened to -$19.9 billion after foreign liabilities increased by $9.1 billion from $26.7 billion. This equates to a 9% rise in real terms for the foreign liabilities from US$2.64 at the end of June to US$2.9 billion. The governments domestic debt stock to the RBZ stood at $9.4 billion up 22% from $7.7 billion in July.
During the month credit to the private sector recorded an annual growth of 52.9% to $5.55 billion from July 2018. This nominal rise is probably more of a reflection of the exchange rate depreciation than an increase in productive lending. Month-on-month, credit to the private sector increased by 8.13% from the end of June 2019. The credit extended to the private sector was distributed as follows: households, 20.81%; agriculture, 22.49%; services, 12.55%; distribution, 13.97%; manufacturing, 9.27%; financial organizations and investments, 9.99%; mining, 6.74% and construction, 2.21%.
The value of transactions processed through the National Payment System (NPS) increased by 16.9% to $38.4 billion, during July 2019. Transaction volumes increased by 7.4% from $181.9 million in June 2019 to 195.3 million. The value of cash based transactions stood at $889.6 million in July 2019, a 22.7% surge from $724.76 million recorded in June 2019. The total value of mobile and internet based reached $12.43 billion, up from $9.7 billion in the previous month while Card based transactions stood at $1.84 billion up from $1.49 billion in June 2019.
- finx
Tags: RBZ,


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