Zimbabwe Trims Market Borrowing Costs as Economic Woes Continue

The Reserve Bank of Zimbabwe (RBZ) has reduced interest rates from 70 percent to 35 percent to encourage borrowing by the productive sectors of the economy.
The reduction comes as a way of complementing the 2020 National Budget which is premised on productivity, growth and job creation.
In a statement, the RBZ’s Monetary Policy Committee (MPC) Chairman, Dr. John Mangudya said the meeting agreed to find measures to stimulate growth within the productive sectors of the economy.
“The committee emphasised the need for the bank to put in place measures to fund the productive sectors of the economy by redirecting excess liquidity in the financial system.
To this end, the bank policy rate, currently at 70 percent, requires review. The committee resolved to revise the bank policy rate from 70 percent to 35 percent, with effect from November 20. This position would be further reviewed at future committee meetings,” said Dr. Mangudya.
In a bid to stabilise the exchange rate, the MPC also set up a working group to ensure the efficiency of the interbank market.
“The working group will comprise RBZ officials, treasurers from authorised dealers and members of the MPC to review the rules of the interbank market, with a view to improving its efficiency. The committee also underscored the need to incorporate Bureaux de Change in the process in order to expand, deepen and enhance the operational efficiency of the interbank market,” he said.
The MPC further encouraged exporters to comply with the obtaining policy directives especially the exchange control regulatory provisions on the repatriation of export proceeds.
“The committee resolved that all exporters that do not repatriate export proceeds within the statutory exchange control approved limits, shall forfeit their retention of export proceeds through the liquidation of such funds upon receipt onto the interbank market at the prevailing exchange rate,” he added.
The decisions were made at the second meeting of the MPC on November 15 with all members in attendance. -zbc