HARARE – Zimbabwe announced on Thursday that it would shortly introduce a $50 note, while raising cash withdrawal limits to Z$2,000 per day from Z$1,000.

The central bank also lifted its main lending rate to 40 percent from 35 percent previously in a bid to reduce liquidity and control speculation in its foreign currency market.

“The decision on interest rates takes into account the current liquidity conditions in the market and the need to continue controlling speculative borrowing,” the Reserve Bank of Zimbabwe (RBZ) said in a statement.

The new measures were announced as it was confirmed that economist Eddie Cross had left the RBZ’s monetary policy committee.

Cross is reportedly “fatigued and frustrated”. The 81-year-old t   old the Zimbabwe Independent newspaper: “Yes, I resigned from the MPC, but I would rather not say more than that.”

Cross often clashed with the RBZ governor John Mangudya with his forthright comments, including announcing last year that the RBZ was planning to introduce $50, $100 and $200 notes to increase physical money supply after the currency lost value. The $20 note is currently Zimbabwe’s biggest bank note.

Mangudya denied there were plans for the $100 and $200 note, while confirming that they would print a $50 note.

“As previously advised, the RBZ shall soon be introducing a $50 banknote to augment the current stock of banknotes in circulation,” the central bank said in its statement Thursday.

“The RBZ reiterates that banknotes, new or old, do not cause inflation in an economy since they do not increase money supply. Cash payments are an alternative to other methods of transacting and do not constitute money creation.”

The central bank maintained mobile banking limits, however.

“The RBZ shall increase the cash withdrawal limits to $2,000 for individuals and maintain the current limits on mobile banking transactions at $5,000 per transaction and an aggregate limit of $35,000 per week.

“This measure will enable the transacting public to continue conducting small transactions using cash, whilst large transactions are conducted through electronic banking,” the statement said.

The RBZ said monetary policy measures introduced last year rescued the economy from a projected decline of 6.5 percent to a decline of 4.1 percent.

The central bank remains optimistic that the projected economic growth of 7.4 percent in 2021 will be achieved and that the annual inflation will close the year at below 10 percent.

The RBZ said Zimbabwe saw a major jump in food imports which increased by 204 percent, from US$194.3 million in 2019 to US$591.6 million in 2020, on the back of increases in maize, wheat and rice imports.

Diaspora remittances in 2020 amounted to US$1.0 billion, a 58 percent increase from previous year’s US$635.7 million. The increase in diaspora remittances, according to RBZ, is mainly due to the liberalisation of the use of free funds in the country and improved channelling of remittances through formal channels.