Fradreck Gorwe Business Reporter
The Reserve Bank of Zimbabwe says it is looking at introducing policy measures that are meant to encourage local banks to offer credit to the productive sectors of the economy.
In its Mid-Term Monetary Policy Statement released last week, the central bank said it was concerned about the depressed levels of productivity and implications on both exchange rate stability and potential output of the economy.
This, it said, had prompted the introduction of the new measures.
The Mid-Term Monetary Policy Statement came just a few weeks after the central bank instituted Statutory Instrument 142 of 2019 which provided for re-introduction of the Zimbabwean dollar to equip the RBZ to conduct effective monetary policy.
While a cocktail of measures have been put in place to improve the macro-economic environment, it has been thought imperative to promote a private sector-led model of development.
“The bank remains concerned about the depressed levels of productivity and their implications on both exchange rate stability and potential output of the economy,” said the monetary authorities.
“In this regard, and consistent with the monetary targeting framework, the bank will introduce measures and incentives to encourage banks to increase long-term lending to enhance credit to the private sector to support economic growth.
“Under this framework, banking institutions with loan maturities of above two years in their loan portfolios will be able to use their commercial loan instruments as collateral for borrowing from the Reserve Bank. This measure is meant to break the cycle of short-termism in the credit market as well as encourage banks to promote long-term savings on their portfolios,” read part of the new monetary policy measures presented by the Reserve Bank of Zimbabwe Governor Dr John Mangudya.
Credit-enhancing policies by the central bank also recognise the crucial role played by small to medium enterprises (SMEs) in the economic development matrix, hence the bank’s desire to deepen financial inclusion by opening doors for SMEs to access finances
“The bank will also be deepening financial inclusion, particularly aimed at enhancing access to finance by SMEs in consideration of their growing role in the economy. The bank shall, therefore, only intervene on a targeted basis to support the productive sectors of the economy under its special productive sector financing window in its role as the lender of last resort to stimulate economic activity,” added Dr Mangudya.