Additional $2,5bn for Zimbabwe Central Bank lending facility

Dr John Panonetsa Mangudya

THE Reserve Bank of Zimbabwe’s Monetary Policy Committee (MPC) has approved an additional $2,5 billion under the bank’s medium term lending facility to the productive sectors to foster economic recovery.

In May this year, Government unveiled an ZWL$18 billion Economic Recovery and Stimulus Package aimed at reinvigorating the economy and providing relief to individuals, families, small businesses and industries impacted by the economic slowdown caused by the Covid-19 pandemic.

Of the package, a total of ZWL$3,02 billion was set aside as working capital for the industrial sector.

In a statement following the recent MPC meeting, Reserve Bank of Zimbabwe (RBZ), Dr John Mangudya, said the committee resolved to put in place a host of measures to buttress price and financial system stability in order to promote national economic recovery.

“The MPC resolved to put measures to buttress price and financial stability in order to promote Zimbabwe’s economic recovery; approving additional funding for an amount of ZWL$2,5 billion under the bank’s medium-term lending facility to support the productive sectors and promote economic recovery,” he said.

The funds will be accessed by final beneficiaries through normal banking channels under an arrangement that is consistent with the conservative monetary targeting framework being pursued by the bank.

Accordingly, banks are encouraged to ensure that repayments by their customers from the existing financing facilities are used to augment the bank’s medium-term financing window.

The MPC also recommended maintaining the limit of ZW$5 000 per transaction for mobile transactions and adopting a weekly limit of ZW$35 000.

These limits will be reviewed continuously in line with the requirements and convenience of the transacting public.

“All financial transactions shall continue to be closely monitored by the bank especially leveraging on the successful implementation of interoperability of mobile money platforms with effect from 30 September 2020, which entails that the transacting public can now easily move funds within the banking system and across the four mobile banking platforms, that is, OneMoney, My-cash, Telecash and EcoCash, through one common national switch,” said Dr Mangudya.

The MPC also resolved to maintain a status quo on both the policy rate for overnight accommodation at 35 percent and the medium-term lending rate for the productive-sector lending at 25 percent.

“This decision on interest rates takes into account of the current tight liquidity conditions in the market and the need to continue controlling speculative borrowing,” said Dr Mangudya.

He said the MPC expects price stability to continue prevailing in the economy during the last quarter of the year mainly on account of the improved operating business environment brought about by the foreign exchange auction system.

The foreign exchange auction system, which started on June 23, this year has ushered in a more predictable foreign exchange market that is conducive for sustainable economic development.

“With 16 auctions having been conducted to date and a total amount of US$291 million having been allotted, the MPC is pleased that the foreign exchange auction has also managed to improve the much needed availability of foreign exchange,” he said. —