May 4, 2017 / 8:03 AM / in 3 years

Zimbabwe central bank says cash deposits rising

A man counts U.S dollars and Euros at a money changer office in central Cairo, Egypt, December 27, 2016. REUTERS/Mohamed Abd El Ghany

HARARE (Reuters) - Zimbabwean banks have recorded a 50 percent increase in U.S. dollar deposits to $450 million in local and offshore accounts in over two weeks, the central bank governor said on Wednesday, citing improved economic performance.

The southern African nation, which ditched its own currency for the greenback and other foreign currencies in 2009, is experiencing acute shortages of cash, forcing banks to limit daily withdrawals.

U.S. dollar notes have largely disappeared, with those holding them selling the cash at a premium of up to 20 percent, especially to businesses seeking to import goods.

Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said cash deposits at banks were on the rise since Easter, even though long queues continue to be seen outside banks.

“The U.S. dollar cash deposits and the foreign exchange held in Nostro accounts are over and above the $140 million of bond notes,” Mangudya said.

The RBZ last year introduced a “bond note” currency, that officially trades at par with the U.S. dollar, in a bid to ease the liquidity crunch.

But cash shortages have remained and the International Monetary Fund said last month bond notes would not solve Zimbabwe’s economic problems. Instead, the IMF called for comprehensive reforms.

Mangudya said the RBZ had reduced the backlog for foreign payments by half to $185 million. Agriculture and mining were also driving economic revival, he said.

“As a result of the increased foreign exchange earnings from agriculture and mining ... the Bank has, since the second week of April 2017, been able to allocate $100 million into the national economy on a weekly basis,” Mangudya said.

Reporting by MacDonald Dzirutwe; Editing by Ed Cropley

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