Update: Zimbabwe lifts suspension on banks lending to private businesses and government agencies

The president had applied the drastic measure to halt the depreciation of the currency and arrest the “economic hitmen” he accused of derailing the country’s economic stability.

According to investigations by the Reserve Bank of Zimbabwe (RBZ), the so-called “economic hitmen” were accused of borrowing Zimbabwean dollars at interest rates below inflation and of using this money to trade currencies. This led to the deterioration of parallel market exchange rates to a high of $1 to Z$400, pushing inflation up to 96.4% in April from 60.6% in January, RBZ said.

Following the implementation of the ban, financial experts in the country criticized President Mnangagwa’s decision, saying the implications would threaten the survival of the country’s banks.

Analysts at BancABC, the local unit of pan-African financial group Atlas Mara, argued that “banning lending activities will threaten the survival of banks as it will wipe out 20-50% of their revenue.”

In a dramatic turn of events, the RBZ has, with immediate effect, lifted the temporary suspension of lending services by banks issued by a circular dated May 9, 2022, the herald Reported.

The RBZ, in a statement, said the lifting of the suspension excludes entities under investigation by the central bank for malfeasance involving loans.

“The lifting of the suspension does not apply to entities under investigation by the Financial Intelligence Unit (FIU) for misusing lending facilities to the detriment of the economy. The FIU has therefore informed all the banks of the entities concerned,” the statement said. part.

This is a developing story…

Troy M. Hoffman