HARARE - Zimbabwe's broad money supply increased by 11,6 percent between January 2014 and January 2015, from $3,88 billion last year to $4,34 billion, on the back of growth in banking sector deposits, statistics from the central bank show.
The Reserve Bank of Zimbabwe (RBZ) figures show the surge in deposits was mainly used to lend to the government ($216,22 million), improve the net foreign asset position ($132,43 million) and lend to the private sector ($55,95 million).
“The improvement in net foreign assets was mainly a result of the reduction in foreign liabilities by deposit money banks and the central bank,” the central bank said.
However, broad money supply declined marginally from $4,34 billion in January to $4,33 billion February this year, confirming the country’s economic slowdown.
Market watchers say these monetary developments indicate that the government had a budget deficit which was partly financed through the domestic banking system, which means it was the largest borrower on the domestic banking system.
The RBZ recently said on a year-on-year basis, broad money registered a 7,86 percent increase from $4,02 billion in February 2014.
The growth was, however, a slowdown of 3,75 percentage points from 11,61 percent recorded in January this year.
“Largely contributing to the annual growth in broad money were increases in long-term deposits, of 32,28 percent and savings, 13,80 percent. Demand deposits, however, registered a decline of 0,21 percent over the same period,” said the central bank.
Despite this decline, demand deposits remained the dominant deposit category, 46 percent of total deposits.
“During the month under review, annual growth in credit to the domestic economy recorded an increase of 3,28 percent, from $4, 1 billion in February 2014 to $4,24 billion. The growth partially reflects an increase of 28,76 percent in net claims on government,” read part of the report.
The increase in net claims on government, was driven by Treasury bills worth $200 million issued in 2014, as part of assumption of RBZ debt by government. On a monthly basis, net credit to government increased by 0,95 percent, from $544,03 million in January to $549,18 million in February 2015.