HomeBusiness DigestZim’s liquidity crisis easing — Biti

Economic Revival Hinges on Sound Policies –– Analysts

Biti told businessdigest  that there was a marked  improvement in the country’s RTGS  balance , which  as of  the first week  of March was  US$264 million, a development he said significantly improved liquidity. 

 

Biti said noticeable improvement on remittances from banks’ Nostro accounts and a US$110 million drawndown   from  the International Monetary Fund’s Special  Drawing Rights,  which the  treasury injected  into the economy last year, also helped the liquidity situation.

He said treasury was working on the restoration of the Reserve Bank of Zimbabwe’s (RBZ) Lender of Last Resort (LOLR) function which will this year receive a further US$3 million.

This was in addition to the already existing US$27 million channelled towards the same purpose early this year. 

Biti said progress had also been made in setting up a Special Purpose Vehicle (SPV)to allow investment by shareholders – government – into the central bank and this should be operational within a few weeks.

In terms of the US$83 million in statutory reserves owed to banks by the RBZ, the central  bank was set to issue  treasury instruments that will have tenures of  two, three and  four years  with interest  rates  of 2,5%, 3% and 3,5%,respectively.

“We are busy working on the agreement on the SPV and we have already issued treasury bills that monetised the statutory reserve of US$83, 2 million,” Biti said.

He said the agreement would promote inter-bank trade and allow banks to use the statutory instruments as security in accessing the LOLR funds from RBZ.

The development will ensure utilisation of resources which banks have been failing to access because of the dysfunctional central bank’s LOLR facility.
Treasury  has also mandated the Infrastructure  Development  Bank  (IDBZ) to  issue  US$50 million worth of infrastructure development bonds  to complement the Public Service Investment Programme (PSIP) budgetary  resources allocated in the 2012 budget.The bonds are designed to facilitate inter-bank market operations.

Biti said in order to improve on the availability of lines of credit, treasury, through the Zimbabwe Economic and Trade Revival Facility (ZETREF), had to date allocated US$62 million to the banking sector.

 

Biti said the ZETREF assessment committee approved US$42,5 million worth of projects, with actual disbursed funds amounting to US$17,8 million.
The country however continues to face high interest rates ranging between 20% and 40%, figures Biti said were detrimental to the economy.

“We are working on easing interest rates which has been hovering around 20% and in some insane cases around 40% and this is unhealthy for the economy,” he said.

 

Turning to the shortage of coins in the country, Biti said treasury was facing challenges to transport the US$5 million in coins held overseas.

He, however, noted that involved  stakeholders,  including  his ministry  and the Bankers Association of Zimbabwe, were still  in discussions on the most cost effective way  to transport the coins amid hopes that by end of April  an agreement would have been reached.

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