THE Reserve Bank of Zimbabwe (RBZ) has revealed plans to increase financing options to support industrialisation, citing current economic stability as an opportune time to drive growth.
The central bank is bullish about the projected economic growth of 6% this year after the exchange rate remained relatively stable since the beginning of the year.
To achieve that ‘stability’, the RBZ had to reduce the money supply to below normal market levels, resulting in a serious liquidity crunch which triggered deflation.
Consequently, local firms have been unable to seek out capital for long-term needs.
To further compound the challenges, the bank policy rate stands at 35% when industry is advocatiing for a single digit interest rate.
During a panel discussion at the International Business Conference (IBC) held during the Zimbabwe International Trade Fair in Bulawayo on Wednesday, RBZ Economic Research Division deputy director William Kavila revealed the bank had several financial facilities to support industry.
“The economy has stabilised, and we think we can take advantage of this stability. We’ve had issues in the past, but the current stability is remarkable, and we believe it’s an opportune time to drive growth,” he said.
“The financial services system is constrained, and unable to provide the much-needed finance. We’re working to address this and provide financing that can support industrialisation.”
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He said the bank had made available several financial facilities, but that surprisingly industry was not making use of them.
“We’re not sure of the reasons, but they’ve given us some explanations,” Kavila said.
“Now, we have the minister introducing another facility that will complement ours, and we’re urging industry to make use of these facilities.”
He also revealed that the bank was working on making the ZiG stronger and more stable.
In its first quarter market report, the RBZ revealed that its foreign reserves accumulation strategy to back the ZiG continued to bear fruit as attested by a significant build-up of forex.
This is because these forex reserves were at US$629 million as of March, from US$276 million recorded as of the end of April 2024.
In the report, the bank reaffirmed its commitment to ‘walk the talk’ of consistent and prudent monetary policy management to sustain price, currency and financial stability.
“As such, the Reserve Bank will remain vigilant to any emerging domestic and external risks to inflation, while simultaneously putting in place appropriate measures to strike the delicate balance between stability and economic growth,” RBZ governor John Mushayavanhu said.
