18 February 2017, Harare — Reserve Bank of Zimbabwe governor John Mangudya has introduced a US$70 million exchange/Nostro stabilisation facility to be disbursed by the end of February 2017 in order to deal with the current delays in the processing of outgoing payments for the procurement of productive imports as part of a raft of measures to stabilise the economy.
Mangudya’s intervention comes at a time the country’s productive sector is in a gridlock due to procurement delays stemming from severely depleted Nostro accounts. Timeous importation of fuel and payments for electricity imports has been hampered, threatening the country with darkness and transport complications.
“The measure is necessary to augment the foreign exchange resources in the banks’ Nostro accounts while awaiting the opening of the tobacco and cotton selling season,” Mangudya said in his 2017 Monetary Policy Statement on Wednesday.
Among other interventions, Mangudya ordered that banks ensure lending rates remain below 12% per annum. He also ordered financial institutions to strictly observe the policy to deposit bond notes into the US dollar accounts without requesting the banking public to differentiate between bond notes and US dollar cash as part of efforts to promote the bond notes
He said the central bank has to date issued US$94 million of bond notes into the market against an aggregate value of the export incentive of US$107 million.
“While the circulation of the bond notes represented by levels of deposits and withdrawals is also encouraging, the bank is putting in place a redistributable measure that mitigates against skewed concentration of bond notes within the banking sector by limiting the maximum amount of bond notes that each bank should hold at any given point in time in relation to its level and type of transactions,” Mangudya said.
“This measure is necessary to ensure that bond notes are distributed proportionately according to the customer base or customer profile of each banking institution.”
The central bank governor also extended the export incentive scheme to tourism and cotton.
Mangudya announced the Zimbabwe Asset Management Corporation (Zamco) had a portfolio of acquired non-performing loans amounting to US$812,52 million which comprised of a proprietary portfolio (US$548,66 million and managed portfolio US$263,86 million).
He, however, stressed the need for reforms to turn around the economy. The Government has been reluctant to introduce reforms such as cutting its workforce for fear of political repercussions.
“The Bank is convinced that addressing structural reforms that include the ease and cost of doing business, fiscal consolidation, public finance management and reorganisation of state-owned enterprises is the remaining hurdle for transforming the Zimbabwean economy,” Mangudya said.”
This, together with the completion of the re-engagement and arrears clearance programme on the basis of the undertakings made in Lima, Peru, in October 2015 will go a long way to improve Zimbabwe’s investment climate and its access to foreign finance.”