Central bank governor Gideon Gono last Friday presented a low-key Monetary Policy Statement that, among other policy changes, slashed the minimum statutory reserve ratio to 5% of incremental liabilities from the current 10% of total liabilities.
The central bank also liberalised remittances and transfers of investment income relating to dividends, profits, capital appreciation proceeds and loan repayment to inspire confidence into the economy.
The statutory reserve ratio policy would affect the change in liabilities rather than the aggregate deposits or liabilities.
The new directive, according to banking experts, will have little impact on Zimbabwe’s banking sector given the relatively slow growth in deposits since the dollarisation of the economy in January 2009.
The move to reduce the ratios came at a time when treasury has projected between US$4 and US$6 billion in domestic savings over the next two years driven by “incentives to savers”.
Independent economist Daniel Ndlela said the new policy was a drop in the ocean.
“Ideally, he (Gono) should have removed the statutory reserve ratio and put in place measures that promote financial intermediation,” Ndlela said. “It’s a blunt instrument and he wants somebody to make a mistake.”
The Bankers Association of Zimbabwe president John Mangudya could not be reached for comment as his mobile phone continued to ring unanswered.
Last year, the International Monetary Fund warned that Zimbabwe’s financial institutions were facing serious exposure following revelations that the apex bank continued to channel statutory reserves to finance quasi-fiscal projects, which rendered it incapable of backing up banks in the event of a liquidity crunch.
The IMF criticised the central bank for using foreign reserve assets to fund its operating expenses, withdrawals of foreign currency amounts and debt service, as well as payments on behalf of the government.
The bank, according to the report, accumulated US$40,3 million in arrears on operating expenses during the first nine months of 2009.
“We believe the additional liberalisation measures taken by the governor are likely to continue to inspire investor confidence in the economy,” said ZABG in a statement. “While we expect positive growth in the productive sectors of the economy we believe the huge international debt overhang coupled by the illiquid local money market will militate against a speedy economic recovery. T
The continued sustenance of the inclusive government is also key to the constructive reengagement with international development partners and financiers.”