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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 mission concludes 4th loan program assessment in Egypt

Published

3 days ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

4 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.