Implications of Zimbabwe Central Bank financial restrictions

HARARE – The recent financial restrictions by the Reserve Bank of Zimbabwe’s (RBZ) Financial Intelligence unit, capping monthly transactions of Zipit to $100 000 will have varying economic implications in the short to medium term, Economic Analysts have said.

The RBZ over the past two months has left no stone unturned in its quest to decisively deal with the volatility of the parallel market exchange rate which has resulted in severe market distortions, especially on the price front.

The interventions by the central bank have targeted every player in the country’s financial ecosystem to try and bring sanity into this sector marred by indiscipline, selfishness and largely driven by perceptions which are not founded on any economic principles but sheer profiteering tendencies that are hurting the general public as well the welfare of the economy.

Dr Prosper Chitambara, an economist believes recent actions by the RBZ are necessary to curb illicit financial transactions that propagate exchange rate instability but encouraged the Central bank to guard against restricting economic activity on the other hand.

“Indeed the move by the Financial Intelligence Unit of the Reserve Bank of Zimbabwe was and will remain a necessity with regards to its regulatory mandate of the country’s financial system which has been prone to abuse by unscrupulous economic agents, taking advantage of the country’s stance on promoting a Cash light society,” he said.

“In line with global trends and as such from that perspective the authorities are in the right track but they should do so in a manner that should not compromise economic activity as the limits set seems to me as too low.”

Another economist Mr Persistence Gwanyanya welcomed the latest reaction from the Central Bank in trying to reign in on errand individuals as well as corporates abusing different financial platforms to transact in an unusual manner jeopardizing the financial system of the country and also reiterated the need to be on the lookout of negative off-springs of this move.

“I commend actions by the Reserve Bank of Zimbabwe in trying to instil discipline and Integrity into the country’s financial sector.

“The sector has been a good hunting ground of indisciplined players for a very long time but the only worry for me is it might increase demand for cash as the limits are a bit low taking into consideration that the economy is highly informal with many people using different platforms to transact, hence there will be significantly a high demand of cash which requires the central bank to play its balancing act effectively and efficiently to avoid unsustainable excessive demand for cash.”

Any country relies heavily on the stability of its financial system to attain its socio-economic goals hence the actions by the Reserve Bank of Zimbabwe are in line with the country’s aspirations. – ZBC