RBZ draws down US$150 million nostro stabilisation facility 

Source: RBZ draws down US$150 million nostro stabilisation facility   | The Financial Gazette November 3, 2016

THE Reserve Bank of Zimbabwe has started drawing down on one of its stabilisation facilities meant to correct the mismatch between current and expected nostro position. 

In his mid-term Monetary Policy Statement, RBZ governor, John Mangudya announced that the bank had arranged US$215 million stabilisation facilities from international financiers.
Ideally, a certain proportion of funds held under RTGS should be supported by funds in the Nostro accounts at a level equivalent to the import dependence ratio. Given that Zimbabwe’s import dependence ratio is around 45 percent, the Nostro position to support the RTGS position of US$1 billion would need to be US$450 million. As at end of August, commercial banks held US$156,9 million in nostro accounts according to RBZ statistics.
Mangudya said the bank had arranged US$215 million stabilisation facilities to close the gap resulting in delays in the remittances of outgoing foreign payments by banks and the importation of cash.
Of the facilities US$150 million would be availed by Afreximbank at rates of under seven percent while US$65 million would be coming from Swiss Bank. Further to that, the central bank is in negotiations for US$330 million from regional sources to enhance production and improve liquidity in the country.
Mangudya said the bank had started drawing down on the Afreximbank facility which will be applied primarily to meet foreign payments of basic goods and to import cash.

“We don’t want to see any shortages of basic commodities so the funds will be primarily applied there and for loan repayments and dividend remittances,” said Mangudya.
“We need our companies to be more productive, generate employment and revenue for the Government and we are happy that through similar interventions, some companies are now operating at full capacity.”

The Afreximbank facility would close the foreign currency inflow gap following the end of this year’s tobacco selling season.
Tobacco is the country’s single largest foreign currency earner. Last year, US$709 million was realised from tobacco export.
In order to stimulate export growth, the RBZ also introduced a five percent export incentive which will be paid out through bond notes set for release next month. The central bank is hopeful that by the time the US$200 million facility, which backs the incentive, is utilised exports would have grown to US$6 billion from current average of US$3 billion.
However, in order to achieve growth in export, deputy governor, Kupukile Mlambo said there was need for export diversification from an over dependency on commodities which are vulnerable to external shocks.

Commodities such as tobacco, gold, nickel, diamonds, ferrochrome, platinum, raw sugar and granite account for about 83 percent of total exports and these have experienced downward trends since 2012. He noted that Zimbabwe could do well if it copies countries like Germany and Japan whose export-led growth strategy has been hugely successful.