Zim crisis threatens region – SA Reserve Bank

Roadwin Chirara

THE South African Reserve Bank (SARB) has warned that a further deepening of the Zimbabwean crisis threatens regional stability.



, sans-serif”>The SARB said in its Financial Stability Review report that foreign currency shortages had seriously affected the importation of essentials such as fuel and power, thus further hurting an already hobbled economy.


But the SARB report said although Zimbabwe’s collapse would have political and socio-economic consequences for the region, this did not directly threaten the South African economy.


“Though not posing a threat to South Africa’s financial system’s stability, a total collapse in Zimbabwe could have wider political, economic and social consequences for the region,” said the SARB.


The bank predicted the current political and economic situation was likely to worsen.


“The economic and political difficulties in Zimbabwe seem to be deepening,” the SARB said. It said its report was necessitated by a need to detect any possible threats to South Africa’s economy.


“The main purpose of the analysis is to detect, at an early stage, any trends or vulnerabilities that may lead to a crisis in the financial system,” the SARB said.


The bank said Zimbabwe’s Operation Murambatsvina had a long-term negative impact on the economy.


“The operation has had a major economic, social, political and institutional impact on Zimbabwean society and its effects will be felt for many years to come,” the SARB said.


It said the impact of the current economic problems on the populace, especially those in the rural areas, was likely to worsen in view of food shortages and associated troubles.


“Food shortages, exacerbated by drought affecting the entire sub-region, have been an additional challenge, particularly in the rural areas,” said the SARB.


According to a United Nations’ report on Operation Murambatsvina, the widely-condemned government initiative led to an estimated 700 000 people across the country either losing their homes or their livelihoods or both.


The South African central bank report came against a background of an International Monetary Fund report which forecast an economic contraction of 7% this year.