Finance

Resolutions of the Monetary Policy Committee Meeting Held On 26 April 2024

Published

1 year ago

April 29, 2024

Reserve Bank of Zimbabwe Press Statement

The Monetary Policy Committee (MPC) of the Reserve Bank of Zimbabwe met on 26 April 2024 and deliberated on recent macroeconomic and financial developments in the economy following the announcement of the Monetary Policy Statement (MPS) on the 5^th of April 2024.

The MPC noted that the 2024 MPS was well received by the market and is expected to ensure lasting stability, certainty, and predictability in the exchange rate and inflation. Preliminary indications since the announcement of the MPS show that the markets have been fairly stable. In this regard, the MPC affirmed its commitment to the consolidation of these positive sentiments and ensure a quick restoration of confidence, trust and anchoring of inflation expectations.

Considering the initial positive reaction from the market, the MPC has resolved to maintain the current policy matrix as follows:

To maintain the current Bank Policy rate at 20% per annum and an interest rate corridor of 11-25%;
To maintain the statutory reserve requirements for demand deposits and savings and time deposits in ZiG at 15% and 5%, respectively; and
To maintain the statutory reserve requirements for demand deposits and savings and time deposits in foreign currency at 20% and 5%, respectively.

The MPC will proactively review the monetary policy measures in line with exchange rate and inflation developments. To support the tight monetary policy stance, the MPC emphasized the need for the Reserve Bank to ensure the following:

Continue to work closely with Government to ensure a robust liquidity management system through the joint Liquidity Management Committee (LMC).
Contain money supply growth to the desired levels determined by targeted inflation, growth of the economy and increase in foreign reserves backing the ZiG currency;
Ensure the creation of effective demand for the domestic currency through strict adherence to the multicurrency system by all players in the economy consistent with the multicurrency system except for exempted services; and
To work closely with Government to encourage the increased use of ZiG for payment of goods and services to public entities including the settling of tax obligations on Quarterly Payments Date (QPDs).

The MPC also directed the Reserve Bank to ensure that there is effective communication on the new structured currency, ZiG, to cover the whole country to ensure that there is financial inclusion. The Reserve Bank was also directed to ensure that, at all times, any growth in reserve money is fully covered by reserves, in the form of gold, other precious minerals and foreign currency balances in the Reserve Bank’s Nostro account.

Overall, the MPC affirmed its strong commitment to fully implement the new monetary policy measures.

Dr. John Mushayavanhu

Governor

29 April 2024

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Zimbabwe holds rates steady at 20% in first meeting since ZiG debut

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AfDB, NMB Bank pen US$15m trade finance deal

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Finance

Zimbabwe holds rates steady at 20% in first meeting since ZiG debut

Published

1 year ago

April 30, 2024

The Business Diary

HARARE – Zimbabwe’s central bank kept its benchmark interest rate unchanged at its first policy meeting since unveiling the gold-backed currency, the ZiG.

Governor John Mushayavanhu said in a statement that the monetary policy committee had held the rate at 20% after receiving positive market reaction to the new currency.

According to Mushayavanhu, the MPC expects currency reforms to help provide “stability, certainty and predictability in the exchange rate and inflation”.

The MPC also set the interest rate corridor at between 11% to 25%, Mushayavanhu said.

The southern African nation introduced ZiG, short for Zimbabwe Gold on 5 April.

The currency is backed by 2.5 tons of gold and $100 million in foreign currency reserves held by the central bank. On the same day, the central bank reset interest rates from 130%, a world record, to 20%.

Business

AfDB, NMB Bank pen US$15m trade finance deal

Published

2 years ago

March 8, 2024

Editorial Team

AfDB, NMB Bank pen US$15m trade finance deal

THE African Development Bank (AfDB) and the NMB Bank Limited Zimbabwe (NMB) yesterday signed a US$15 million facility to boost trade finance.

Delegates from both institutions graced the signing ceremony at the NMB Bank headquarters in Harare yesterday. Among them were AfDB country manager Moono Mupotola and NMB Bank chief executive officer, Gerald Gore.

Mupotola expressed enthusiasm about the innovative partnership, stating: “This is a significant step forward in supporting the growth and competitiveness of Zimbabwean businesses.

“By mitigating risk and facilitating access to trade finance, we are empowering SMEs (small and medium enterprises) and local corporates to participate more actively in regional and international trade.”

Gore emphasised the agreement’s importance to Zimbabwe’s economic development. He stated: “This facility will be instrumental in enabling NMB to provide crucial trade finance support to a wider range of Zimbabwean businesses. This will not only unlock new trade opportunities but will also contribute to job creation and economic growth.”

The transaction guarantee, according to a statement released yesterday, is an uncommitted trade finance facility granting NMB Bank access to a maximum of US$15 million, with a tenure of up to 36 months.

“This strategic collaboration aims to unlock significant trade finance opportunities for Zimbabwean businesses, particularly benefiting SMEs and local corporates engaged in agri-business and trade distribution value chains,” the statement read.

This agreement aligns perfectly with AfDB’s broader trade finance programme objectives, with a specific focus on supporting the vital role of SMEs in Africa’s economic development.

It offers up to 100% coverage to confirming banks, effectively mitigating non-payment risks linked to NMB Bank’s trade transactions on a per-transaction basis. Tailored to support intra-Africa trade and trade between Africa and the rest of the world, this facility serves as a versatile and responsive financial solution.

The facility significantly diminishes the risk for international financial institutions, encouraging them to actively engage in trade finance activities with Zimbabwean businesses.

It accommodates various trade instruments, including confirmed letters of credit, trade loans to African banks, irrevocable reimbursement undertakings, availed bills and promissory notes.

By reducing the necessity for cash collateral and offering up to 100% payment guarantee on the transaction value, the arrangement presents an alternative risk management strategy, ensuring the security of trade transactions, especially for the SMEs.

The SMEs often face challenges in accessing trade finance compared to their larger counterparts. This initiative directly addresses this gap, fostering a more vibrant and inclusive business environment in Zimbabwe.

NMB Bank is a multi-award-winning registered commercial bank and the principal subsidiary of NMBZ, a Zimbabwe-based investment holding company listed on the Zimbabwe Stock Exchange. The bank has among its top shareholders strong international and regional entities such as African Century, Arise, Old Mutual and AfricInvest which have a very strong African footprint.

NMB Bank is a registered member of the Deposit Protection Scheme.