Depositor funds contracted by 8% to $3,4 billion in May attributed to insecurity in the banking sector and the general decline of the economy, a local accounting firm has said.
Own Correspondent
In an a monthly economic review for June conducted by H and E Bloch and Company Chartered Accountants, aggregate depositor funds depreciated to $3,4 billion in May from $3,7 billion recorded the previous year.
According to the accounting firm’s report, the instability in the money market is also attributed primarily to fears arising from proposals by some government officials to bring back the Zimbabwe dollar.
Economic analysts have said that the country is not yet ready to use its own currency as such a move is likely to result in hyperinflation similar to that experienced in the pre-dollarisation era 2008.
The financial sector in Zimbabwe continues to face a myriad of challenges, chief among them being policy inconsistencies and the uncertainty surrounding the coming election.
“Investors have pronounced fears of investment security, primarily fuelled by Zimbabwe’s indigenisation and economic empowerment legislation and policies, and by uncertainty as to future political stability,” the accounting firm said.
The review added that there were concerns as to whether such elections would be conducted transparently, in a free and fair environment and devoid of intimidation, harassment and violence. It said interested investors were adopting a wait-see-policy with regards to investment.
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According to the report on the monthly review total broad money growth rate declined to 10, 47% in May from 12 and 91% recorded in prior month.
Consistent with the declining broad money supply growth, domestic credit decelerated to 28,1% in March from 34, and 2% in February as the economy continues to weaken. The economy continues on a downward spiral with Finance minister Tendai Biti, in an overview of the economy in April, attributing the contraction to political instability, among other things.
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