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Treasury Warned Against Printing Money To Purchase Grain

MUTARE: Renowned economist with the Labour and Economic Development Research Institute of Zimbabwe (LEDRIZ) Dr Prosper Chitambara has caused the treasury against printing more money to purchase maize from local farmers saying it may trigger inflationary volatility.

The Grain Marketing Board (GMB) has announced that it needs $60 billion to purchase grain and has since identified 1 350 collection points across the country against a target of 1 800 buying points set for farmers.

Dr Chitambara cautioned that despite its noble targets of reducing export of grains and fostering food security, increasing money supply may trigger inflationary volatility.

He was speaking on the sidelines of a public lecture on the state of the economy targeted at media students organized in conjunction with Media Community Alliance Trust (MCAT) in Mutare recently.

“There are benefits obviously in the sense that we may be able to export and deal with food insecurity but at the expense of heightened inflation.

“It is all about balancing the cost and benefits. There is a cost to printing money but there is also a benefit in the sense that the country may be able to export and enhance food security.

“It is a matter of weighing the costs and the benefits. But definitely any large printing of money will result in inflationary pressures being generated and created,” said Dr Chitambara.

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Asked whether it will be a good move for government to print more money anytime soon, Chitambara said Zimbabwe has got no option but the ideal situation is to use government revenues to finance maize purchasing.

“But there is a challenge that producer price for maize has been set at very high level probably the highest in the region, yet farmers are expected to sell to GMB,” he said.

Chitambara said although Zimbabwe had limited options it is not ideal to print money.

Government has set a producer price of ZW$32 000 (US $381) per ton for white maize which is the highest in the region.

“The ideal situation is to use your own revenues but we do not have much degrees of freedom to do it.

“It is not ideal but we have no option,” said Dr Chitambara.

Zimbabwe has been experiencing some droughts but thanks to higher than usual rainfall, the country is expected to harvest up to 2.8 million tons of maize this year which is three times 2020 output.

The country has experienced years of negative economic growth, while food insecurity has compounded the situation of macro-economic instability.

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