eBusiness Weekly
Tapiwanashe Mangwiro
The Reserve Bank of Zimbabwe (RBZ) in its quarterly economic review says reserve money growth in the quarter ending March 2022 stood at 7,48 percent.
Reserve money stock stood at $28,89 billion in March 2022, compared to $27,81 billion recorded in December 2021. This represented a quarter-on-quarter increase of 7,48 percent, which was within the target of 7,50 percent for the quarter.
“On an annual basis, reserve money grew by 44.87 percent in March 2022, compared to 38,26 percent recorded in December 2021. The increase in reserve money was mainly attributable to the growth in broad money as a result of a corresponding increase in statutory reserves,” the Bank said.
RBZ acknowledged that resurging inflationary pressures in the economy, largely owing to exchange rate depreciation on the parallel market, prompted their tightening of the monetary policy in April 2022.
During the same month of April, the reserve money quarter-on-quarter growth target was revised downwards, from 7,5 percent to 5 percent for the second quarter of 2022, while interest rates were further increased.
“Broad money stock stood at $589,09 billion in March 2022, compared to $475,36 billion as at the quarter ended December 2021,” the statement reads.
The growth reflected quarterly expansions in foreign currency deposits which grew by 30,59 percent and currency in circulation, which increased by 39.55 percent.
Local currency deposits grew by 18.43 percent in the quarter.
In the quarter under review, local currency deposits accounted for 52,74 percent of broad money, with foreign currency deposits constituting 46,71 percent while currency in circulation accounted for the remaining 0,55 percent.
In the quarter ending march 2022, credit on a quarter-on-quarter basis grew by 25,16 percent, from $340.29 billion in December 2021 to $425.9 billion.
“The growth was largely driven by increases in claims on general and local government, 49,10 percent and credit to private sector which grew by 40,10 percent.
However, net credit to government declined by 5,39 percent to $79,1 billion during the quarter under review,” RBZ said.
During the quarter under review, credit to the private sector amounted to $312,33 billion, which is an increase of 40,10 percent, from $222,93 billion extended to the private sector in the fourth quarter of 2021.
Credit to the private sector mainly benefited the agriculture and household sectors, which received 25,48 percent and 22,40 percent of the total credit, respectively. During the same period manufacturing and distribution sectors received 12,49 percent and 11,37 percent, of total credit respectively.
Credit to the private sector was largely channeled towards inventory build-up at 32,64 percent whilst other recurrent expenditures gobbled 30,38 percent of total credit.
Fixed capital investments accounted for 16,15 percent of private sector credit in the quarter ending March 31, 2022.
