Withdrawal limit to stay – Minister Ncube

by | Mar 29, 2021 | Business | 0 comments

Hosia Mviringi

Reserve Bank Zimbabwe has no immediate intentions to increase withdrawal limits for personal accounts from $2000 as this will expose the local currency to manipulation and abuse, a Government minister has said.

Speaking during last week`s Senate Question and Answer sessions, Finance and Economic Development Minister Professor Mthuli Ncube said;
“The issue about regulating access to cash was triggered by the abuse that we had seen taking place from the use of the mobile banking platform in terms of electronic money.
We realise that it is necessary to restrict the cash withdrawals, the amounts that can be used at any point in time and be transferred at any point in time.”

Professor Ncube said there has to be strategy in the way in which regulations are applied and maintained.
“This is necessary for us to keep those restrictions in place as a general policy. If we loosen up on that, it will cause us a lot of difficulties and basically, we will go back to where we were before, where individuals will access larger amounts of cash and then want to trade in the parallel market and just make our currency more unstable,” Prof Ncube said.

One of the major achievements of the Transitional Stabilisation Program (TSP) is the successful stabilisation of the local currency.

This has largely been achieved on the back of improved fiscal discipline on the part of government and a tight control on money supply growth.

The local unit has largely remained stable since last year’s introduction of foreign currency auction and this has contributed to stable prices for both imported and locally produced products.

The Zimbabwean currency has previously come under severe pressure as lack of discipline permeated the local economy.
Higher withdrawal limits have the effect of encouraging parallel market activities.

Biggest culprits are big retailers who are in the habit of not banking their daily takings which they then channel to the parallel market.

In the current scenario, most transactions are conducted on the electronic platform, a situation which encourages consumption of locally produced goods, thereby boosting industrial capacity, employment creation and more revenue for government.

After the introduction of the foreign currency-trading platform last year, local goods which used to occupy only seven per cent of supermarket shelves have now increased to 45 percent of shelf space.

Professor Ncube has maintained that keeping low withdrawal limits is the tonic to taming inflationary pressure, which has the potential to undo all the economic gains registered to date.

Under the successor National Development Strategy 1 (NDS1) blueprint, inflation reduction is at the core of the program to grow the economy, widen the tax base and achieve the envisaged upper-middle-income economy by 2030.