HARARE, January 23 (The Source) – Zimbabwe’s annual broad money supply grew by 15,2 percent in November, 2016 driven by a 33,98 percent increase in demand deposits and a 2,94 percent surge in savings deposits, latest data from the central bank has shown.
Broad money supply (M3), a measure of the money in circulation which includes physical currency and demand deposits, stood at $5,466 billion in November 2016, a 2 percent increase from the $5,356 billion recorded in October 2016.
“Broad money continued to be dominated by short term deposits, partly reflecting economic agents’ preference to hold financial assets in the form of cash,” said the RBZ.
However, short term deposits which continue to dominate broad money are not conducive for economic development because they do not support long-term lending which is vital for economic growth.
RBZ said the total deposits in the month under review, comprised of demand deposits, 59,51 percent; over 30 days deposits, 16,44 percent; savings deposits, 12,18 percent; and under 30-days deposits, 11,87 percent.
Banking sector credit rose by 16,18 percent to $6,21 billion in the month of November 2016 from the $5,345 billion recorded during the same period in the prior year.
On a month-on month basis, banking sector credit rose by 3.9 percent in the month under review, from $5,978 billion in October 2016.
“In terms of sectors, private sector credit was distributed as follows: households, 23.41 percent; services, 16.95 percent; agriculture, 19.23 percent; manufacturing, 15.11 percent; distribution, 12.36 percent; mining, 5.55 percent; financial organisations and investments, 3.06 percent; transport and communications, 2.38 percent; and construction, 1.55 percent,” said the central bank.
The total value of transactions processed through the National Payment System increased by 7 percent to $6, 9 billion in November 2016 from the $6,476 billion recorded in the previous month.