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Bank Lending Ban To Be Reviewed This Week

Bank Lending Ban To Be Reviewed This Week

Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya said that the suspension of bank lending that was announced a week ago will be reviewed this week. Said Mangudya:

The suspension will be reviewed next week (this week).

On Saturday, 7 May, President Emmerson Mnangagwa announced the suspension of bank lending as part of measures to stabilise the Zimbabwe dollar that was in free fall.

Meanwhile, Mangudya said the move was necessary to find out what was causing the Zimbabwe dollar to lose value so rapidly and the reason behind rising inflation. Said Mangudya:

What we have found out is what I have told you, that other corporates were heavily borrowing from the market or from the banks for the purposes of using that money to purchase their products and manipulate the exchange rate, which is called currency attack.

They attack the currency so that it depreciates, then they pay back their loans. In fact, they make a profit from borrowing.

Because the adjustment in the exchange rate is higher than the interest the bank will get. This is why the interest rates route was never going to work for these guys.

Because even if you put the rate at 80 per cent, the rate will depreciate much faster even if you put it at 100 per cent or 150 per cent.

As I read from Professor (Steve) Hanke, who said you need to increase the rate to 166 per cent, even if you put it at 166 per cent, they will send the parallel market rate to much higher than the value of the interest.

By so doing, you continue to chase your tail because they are moving the target. Because their job is to attack the currency.

Mangudya revealed that the PBZ will investigate companies that were offered contracts by the Government to undertake various infrastructure projects such as roads and dams to see if they are not the ones dumping huge sums of Zimbabwe dollars on the black market. He said:

That is why I have said let’s have a ceasefire for now in terms of lending, then we see if they (the contractors) are the ones (moving the rate).

Let’s also investigate them to see whether their invoices are correct or whether they are fair, or whether they are pricing using the willing-buyer, willing-seller rate.

In any case, we also understand that the Government is also paying part of those contractors in foreign currency so that the appetite for foreign currency is reduced because they will be having foreign currency from Government to buy their bitumen, spares, tools and fuel that they require for the roads.

So it means the balance that they get in local currency they should be able to keep it in this country.

But, if they want to preserve value by going to sell it again stoking inflation, then they are the wrong people who are working for us.

More: The Sunday Mail

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13 Comments

......... 1 month ago

policy inconsistance


Dzvamu 1 month ago

Marecords ekuti anoresigner tinawo zvesure pakudziya pachigaro kkkk

The Mberengwean 1 month ago

No more confidence in you Mr Mangudya, at least you should resign so that we have new ideas.
2016 Mangudya promised that if the bond note lost value against the USD you were going to resign, then now where are we


Nimrod 1 month ago

@ The Mberengwean you a right. the stage is now set for mangudya''s resignation. GO sir

Jah🇿🇼Tsvarie-07 1 month ago

Chasing the wind indeed 😂


Tongoonai 1 month ago

You can not change economic principals every two days. This means you are chasing the wind.


Asalif 1 month ago

we are tired of policies and implementations of yours more over they don't work if they work this economy would not have been on its knees


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Machiavelli 1 month ago

The week has come and gone and yet no indication of the long-promised review of bank lending ban has been made.

What we have seen are conflicting and confusing statements from the President the RBZ Governor and the Minister of Finance spiced up with murky statements from Ndaba Mangwana all at cross purposes. Elsewhere Kembo Mohadi has further confused the plot by explaining the causes of this confusion.

Whatever the rationale, whatever the motivation, the inevitable conclusion is that this government is running scared, has no clue about long term resolution of our economic crisis and has lost the confidence of its workers, the general public, banks, business and investors. You can't fight everyone and hope to win. A little introspection is required. IS IT NOT TRUE THAT THE GOVERNMENT IS THE PROBLEM?


Biti the best finance minister 1 month ago

itai plan varume coz munotikuvadzisa nezvimbadzo


ABSA 1 month ago

President's advisor is the worst and useless advisor ndatopedza


Nimrod 1 month ago

Very **** knee jack policies. what kind of advisors are ncube and mangudya to the president. look at the damage already done. How does this promote stability. ****, ****, **** leaders


Ghetto Yut 1 month ago

saka mukuda kuti tikuombererei maoko nxaaaa


VYBZ KARTEL 1 month ago

Chamisa is the real deal. Chamisa ndiwo mushonga pamatambudziko ose e Zimbabwe

Vote for Chamisa. Vote for CCC



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