Former Zimbabwe legislator and Monetary Policy Committee member Eddie Cross has sensationally claimed that the Reserve Bank of Zimbabwe (RBZ) was printing $1 billion weekly mainly to buy gold.
At the official rate of around 82, this translates to about US$12,2 million weekly and about US$635 million annually.
The latest claim brings into sharp focus the central bank’s transparency and accountability at a time the government claimed to have stopped its printing press which dragged the country into an unprecedented hyperinflationary environment around 2008.
“We have shown that at the RBZ research there is a direct correlation between money supply and the exchange rate and I think that until we stop printing money for various reasons …we print money mainly to buy gold, we print a billion (Zimbabwean dollars) a week,” Cross said in his presentation during an online Big Debate Series, Zimbabwe 2021 Economic Prospects, hosted by Alpha Media Holdings.
Cross also said that not the entire $1 billion was printed as part of it could be existing resources although he had no information on the standard operating procedure.
In 2020, Cross said the RBZ required about $45 billion on top of US$800 million to buy gold.
Cross, however, defended the move, saying it didn’t really cause inflation as the money was used to buy an asset easily converted to hard currency as opposed to financing debt.
When contacted by Africa24.news, Central bank chief John Mangudya dismissed Cross’ claims.
“What I think he meant was that we purchase forex from the market in an amount of $1 billion per week for sale to the auction system,” Mangudya said.
“So its net effect is zero on the increase in money supply.”