Govt needs $200 million to recapitalise RBZ

via Govt needs $200 million to recapitalise RBZ, considers resuming interbank market | The Source November 27, 2013

Finance minister, Patrick Chinamasa on Wednesday said government needs $200 million to recapitalise the Reserve Bank of Zimbabwe to restore its lender-of-last-resort capacity in a bid to lower the cost of borrowing.

Zimbabwe adopted the use of multiple foreign currencies – chiefly the United States dollar and South Africa’s rand — in 2009 after its own currency was rendered worthless by hyperinflation, ruling out central bank interventions through monetary policy.

The tight liquidity conditions have resulted in high interest rates which the government hopes can be lowered by the resuscitation of an interbank market anchored by a well-capitalised central bank.

“We need to restructure the financial services sector,” Chinamasa told a meeting attended by representatives of banks and mining companies including Barclays Bank, Standard Chartered Bank, Zimplats, RioZim and Old Mutual.

He said he was under pressure from Cabinet to address the high interest rates.

“The cost of money in Zimbabwe is very high. You cannot borrow at less than 15 percent,” he said, accusing banks of putting a mark-up for non-existing country risk.

At 15 percent interest rate, borrowing in Zimbabwe is three times higher than regional rates, which average around five percent.

In January, banks signed a Memorandum of Understanding (MoU) with the central bank to cut customer service fees, but interest rates have remained high, often reaching 25 percent in some cases.

Despite the high interest rates, loans and advances from banks increased by 5.5 percent to $3.5 billion in the five months to May.

Loans to individuals accounted for 22 percent of the banking sector loans followed by services with 18 percent, manufacturing 16 percent and agriculture 15 percent.

 

COMMENTS

WORDPRESS: 5
  • comment-avatar
    ZimJim 8 years ago

    That’s “small change” for Bob. It’s “His Zimbabwe”, let him pay-in for once! Thats just a fraction of his travel budget!!!

    C’mon Bob, I KNOW you read these… 😉

  • comment-avatar

    Boo hoo hoo, we’ve chased away all of the businessmen with our indiginization program and now they won’t keep their money in our banks. Don’t they read the Herald? They should trust us with their money!

  • comment-avatar

    It’s his zanu thieving cronies who want zero interest rates. China-masa clueless. Serious players now dealing in forever at 20per cent premiums forex

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    The high interest rates only gonna get worse. It’s actually the old blackmarket rate in disguise fast regurning

  • comment-avatar

    What recapitalisation are they talking about here? The country does not have a currency to print or coins to mint. So what recapitalisation? Funding recurrent expenditure.Salaries for superfluous directors,executives and paying for hefty exit handshakes like what we learnt the other day of Kereke. and the perks that go along with it. Is that what they call recapitalisation? Please help us!