Broad money supply in $82 billion growth

BROAD money in the economy grew by more than $82 billion between March and April this year, latest figures from the Reserve Bank of Zimbabwe show.

According to the April Monthly Economic Review, Broad money amounted to $671,37 billion in April 2022, up 13, 7 percent from $589,09 billion in March 2022.

Broad money is a measure of the country’s money supply.
The growth comes as some economic analysts have blamed the depreciation of the local currency on excess liquidity in the market.

While the central bank had previously focused on keeping Reserve Money growth under a tight leash, with zero growth now expected per quarter going forward, analysts had focused on Broad Money supply growth as a source of currency instability.

The local currency has depreciated from $220 per US dollar in January this year to approximately $600 per US dollar on the parallel market.

In a recent interview with our sister paper, The Sunday Mail, RBZ governor Dr John Mangudya admitted that there is another source of money supply growth in the economy other than Reserve Money.

“The whole idea of reducing that money supply is to ensure that there is no excess money in the market to push inflation or to push the exchange rate, which has the passthrough effects of the exchange rate into the inflation numbers.

“So, we have been doing that. Now, having done all those things, we found out there is another form of money in this economy, which is called broad money.

“There is this other broad money that is going up which is out of banks lending, commercial banks lending money to the corporates,” said Dr Mangudya in the published interview.

While there was zero growth on Reserve Money, Broad money between March and April grew by 13,97 percent.

On an annual basis, broad money registered a growth of 156,17 percent, though down from 404,15 percent in April 2021.

Bond Notes
The local currency component of broad money grew by 155,04 percent; while foreign currency deposits increased by 156,57 percent.

The money stock was largely composed of local currency deposits, 54,47 percent; and foreign currency deposits, 45,01 percent.

During the month under review, net domestic claims increased by 19,18 percent, to $4507,57 billion.

The growth was largely due to increases of $54,85 billion and $23,04 billion in credit to the private sector and net claims on Government, respectively.

The annual growth in broad money was largely driven by increases of 263,17 percent and 240,68 percent in net claims on Government and credit to the private sector, respectively.-The Chronicle