The Confederation of Zimbabwe Industries (CZI) said the increase in money supply as the government borrows to fund its excessive expenditure is stoking inflation.
A CZI official urged the government to desist from making one-off payments to its suppliers, but rather pay in tranches so that they won’t rush to the parallel market to buy foreign currency.
Speaking before the Budget, Finance and Economic Development Parliamentary Committee on Monday, CZI chief economist Tafadzwa Bandama said:
The problem we are having in the economy is the growth in the money supply. Just to highlight that in the last quarter of 2019, the money supply was $35 billion and in the first quarter of 2020, it is now at $46 billion, which is quite a huge growth in the money supply.
We also want to highlight as CZI that supply of services to the government must be rationalised, especially when it comes to payment. If say a supplier does a job for $3 million, for example, instead of giving them the whole $3 million which they will use to rush to the parallel market, it’s better to pay in tranches so that we do not have a run on the exchange rate.
Several business executives who appeared before the Committee blamed government policies for the economy’s poor performance.