Annual broad money supply improves


HARARE - Zimbabwe's annual broad money supply growth rate rose from 3,5 percent in August 2015 to 4,5 percent in September this year, statistics released by the central bank show.

Referred to as M3, broad money is the most inclusive indicator of money supply in the economy but measures funds held by formal banking institutions.

Economists, however, noted that the bulk of the funds in the economy are circulating outside formal systems with some studies estimating between $3 billion and $7 billion to be changing hands in the informal sector.

On a monthly basis, broad money supply increased from $4, 473 billion in August 2015 to $4,586 billion in September.

“Annual growth in broad money was driven by increases across all deposit classes, with the exception of short-term deposits. Long-term deposits registered the largest annual growth of 11,4 percent, followed by demand deposits, 4,8 percent and savings deposits, 4,5 percent,” the central bank said in its monthly economic review released yesterday.

In the period under review, short-term deposits, however, registered a decline of –3,7 percent.

According to the Reserve Bank of Zimbabwe, annual growth in total banking sector credit to the domestic economy increased to 19 percent in September from 18,8 percent in August.

On a monthly basis, banking sector credit rose from $5, 029 billion in August this year, to $5, 079 billion in September.

“On an annual basis, growth in credit to the private sector which makes up the largest proportion of banking sector credit increased by 2,4 percent in September up from 1,4 percent in August 2015,” the RBZ said.

Month-on-month, credit to the private sector also increased from $3, 780 billion in August, to $3, 844 billion in September.

In terms of distribution, loans and advances accounted for 83,1 percent of the total credit to the private sector, mortgages advanced by building societies, 12,5 percent, other investments, 3,8 percent,  bankers’ acceptances, 0,3 percent and bills discounted, 0,2 percent in the month under review.

The central bank noted that on a sectoral basis, 20,4 percent of credit was distributed to agriculture while distribution received 15,1 percent and services — including tourism — received 16 percent.

The manufacturing industry got 14,4 percent of the credit while mining received 5,9 percent and  transport and communications, and construction both got 3,5 percent and one percent respectively.

“Credit to households constituted 19,7 percent of total credit to the private sector during the month under review. Credit to the private sector was mainly channelled towards asset purchases, 43,6 percent, inventory build-up, 33,5 percent, consumer durables, 13,4 percent and vehicle purchases, 3,3 percent,” the RBZ said.

Capital development accounted for 4,6 percent of total loans and advances, broken down as plant and equipment 3,1 percent land development and office equipment, 0,9 percent and 0,6 percent, respectively.

Comments (1)

the money circulating in the informal sector should be channeled back to the formal sector. Government through the reserve bank should come up with ways to make this work. Money in the informal sector is unaccounted for and cannot help improving any economic indicators which are essential in bringing in investors.

malajila - 16 November 2015

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