Banks sitting on more than US$1.7 billion idle resources

George Guvamatanga

LOCAL banks are sitting on more than US$1,7 billion in foreign currency deposits, with little forex being extended to starved productive sectors, a situation that piles pressure on demand for foreign exchange on the auction system.

This comes from indications that while the auction system is designed to work on a T3 (three day) settlement cycle, some beneficiaries get their funds after several weeks on end, with the backlog sometimes hitting as much as US$200 million.

However, the auction system has been credited with fostering economic stability and growth, projected at 7,8 this year, as well as the current rapid fall in the rate of inflation, which fell to 56,37 percent (annualised) last month from 106,6 percent in June.

Secretary for Finance and Economic Development George Guvamatanga, said the challenges regarding inadequate amounts to meet requirements of imposters reflected an incomplete market in terms of financial intermediation.

He was speaking during a 2021 mid-term budget and economic performance review panel discussion organised by Business Weekly and Zimpapers Television Network (ZTN) in conjunction with the Confederation of Zimbabwe Industries.