Government is set to issue higher denominated notes of up to Zwl 50 in a move to improve cash availability and portability in the high inflationary environment, a leaked government economic strategy document reveals.
Earlier this year, Finance and Economic development minister Mthuli Ncube pre-empted the move saying this will ease the amount of notes consumers have to carry around to purchase goods.
Currently the country’s highest cash denomination is the Zwl 5 note.
Government says it shall continue to drip feed cash into the economy from the current 3 percent of broad money supply to an optimal level of around 10 percent.
Due to inflation, some lowest denominations such as the 25 cents and 50 cents coins have since been ostracized from the market.
The new notes are expected to come in batches of zwl 10, 20 and 50 notes.
To preserve value of the new note, government is also expecting to ease inflation to two digit level by year end.
“(By end of 2020) Reduce annual inflation from the current high 3- digit levels (540 percent in February 2020) to 2 digit levels ( around 90 percent) by end of December 2020,” reads the document.
There are fears that the February inflation figures of 540 percent may have been overtaken by events with inflation estimated to be heading towards the 1 000 percent mark following a sharp increase in prices in days preluding the lockdown three weeks ago.
Government intends to enforce, ” monetary aggregate levels and growth rates consistent with annual inflation targets,” as a principle to curb excess money supply into the market and minimise price increases.
Zimbabwe is targeting inflation rate of about 3-7 percent by 2023 in line with SADC economies.
However analysts say deeper rooted structural imbalances in the economy are highly likely to pose challenges for set targets.
The exchange rate movements pepetuated by the parallel market activities remain the biggest movers of inflation, the say.
