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Zimbabwe reverses order freezing bank lending one week after policy change

Published

3 years ago

May 17, 2022

Barely a week after it banned banks in the country from lending money to government, businesses and individuals, the Zimbabwen government has reversed itself by lifting the freeze order, the Zimbabwean Central Bank announced in a statement on Tuesday.

The freezing order which came directly from President Emmerson Mnangagwa on May 7, was meant to arrest the currency’s depreciation, which he said was threatening the country’s economic stability.

The President, in a statement, had said the measure was also to stop speculations against the Zimbabwean dollar and to arrest its rapid devaluation on the black market.

“Lending by banks to both the government and the private sector is hereby suspended with immediate effect, until further notice,” Mnangagwa had said in a statement.

The government also said at the time that it had started investigating unnamed speculators for taking out Zimbabwe dollar bank loans to buy foreign currency on the black market, thus driving the local currency’s value lower.

But while announcing the reversal, the Central Bank said it would continue investigating the said speculators while the ban will be temporarily suspended.

“The Central Bank wishes to advise the public that the temporary suspension of lending services by banks has been lifted with immediate effect.

“We said the lending freeze was temporary. We have lived true to our word,” the statement said.

It added that only organisations being investigated for abusing loan facilities would not be allowed to borrow from banks.

The lending ban had drawn a lot of condemnation and criticism from business groups which warned that the freeze would hurt commerce and worsen Zimbabwe’s economic crisis.

The lending freeze had slowed the Zimbabwean dollar’s slide on the black market, although it had little effect on the official rate in an economy which had experienced a 500 billion percent hyperinflation in 2008, and is currently experiencing another episode of high inflation, with year-on-year inflation rising to 96.4 percent in April from 72.7 percent in March, driven by the rapid devaluation of its currency.

Related Topics:Bank Lending Devaluation Featured Zimbabwe

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IMF, Egypt reach agreement for fourth review of Egypt’s $1.2 billion loan request

Published

1 day ago

December 26, 2024

Ifeoluwa Dada

Egypt and the International Monetary Fund (IMF) have reached a staff-level agreement over the fourth review of the Extended Fund Facility arrangement, which might lead to a $1.2 billion payout under the program.

In March, Egypt, struggling with rising inflation and cash shortages, consented to the $8 billion, 46-month facility. Its economic problems were made worse by a precipitous drop in Suez Canal revenue over the last year due to regional tensions.

Over the next two years, Egypt’s government has committed to raising its tax-to-revenue ratio by 2% of GDP, according to the IMF, emphasising removing exemptions rather than raising taxes.

According to a statement from the IMF, this would allow it to expand social expenditure to support vulnerable populations.

“While the authorities’ plans to streamline and simplify the tax system are commendable, further reforms will be needed to enhance domestic revenue mobilization efforts,” the statement said.

According to the IMF statement, Egypt had also committed to maintaining its commitment to a flexible currency rate and to taking more urgent action to guarantee that the private sector became the primary driver of development.

The IMF’s executive board still has to accept the fourth review’s staff-level agreement.

VenturesNow

Libya’s eastern govt accepts petrol subsidy elimination

Published

1 day ago

December 26, 2024

Ifeoluwa Dada

In a recent statement, the eastern government of Libya claimed it had reached a consensus on a plan to eliminate gasoline subsidies and would draft a mechanism to carry out the accord.

Additional information on the idea was not released by the administration led by Osama Hamad, a challenger to the internationally acknowledged Tripoli-based government.

However, it is uncertain if Hamad’s government would be able to carry out the plan in the divided nation.

According to the Global Petrol Prices online tracker, a litre of gasoline costs just 0.150 Libyan dinars ($0.03) in OPEC member Libya, making it the second-cheapest in the world.

Following an uprising against former ruler Muammar Gaddafi in 2011, smuggling networks have thrived in the ensuing political unrest and armed fighting. In 2014, conflicting eastern and western governments separated the nation.

A World Bank analysis estimates that the annual value of fuel smuggling from Libya is at least $5 billion.

In a meeting with Mari Barrasi, the deputy governor of the Central Bank of Libya (CBL), located in Tripoli, and four members of the bank’s board of directors, Hamad in Benghazi supported the idea of removing subsidies.

The CBL’s Benghazi branch offices served as the venue for the conference.

The eastern parliament appointed Hamad in 2023 to succeed Abdulhamid Dbeibah, who had been put in position in 2021 under a U.N.-backed procedure that the parliament said had lost its legitimacy.

Dbeibah, who is located in Tripoli, stated in January that he will conduct a public poll on the topic of eliminating gasoline subsidies, but he hasn’t done anything about it since.

According to CBL figures, gasoline subsidies cost 12.8 billion Libyan dinars between January and November of this year. 4.8 Libyan dinars to $1 is the official exchange rate.