adminFINANCE Minister Patrick Chinamasa said yesterday government will not control interest rates that banks should charge but is in negotiations with the financial institutions to “fairly” price the money.
With interest rates hovering over 15 percent and bank clients being charged exorbitant penalties for defaulting on loans, parliamentarians took Chinamasa to task on why government was failing to reign in on the situation.
Bikita West parliamentarian Munyaradzi Kereke said it did not make sense for banks to charge high interest rates when Zimbabwe’s inflation was in the negative.
As at the end of May, the Zimbabwe National Statistics Agency put the country’s inflation rate at -2.70 percent.
“The interest rates being charge here are nowhere near those being charged in war zones,” Kereke charged.
“Is it not time government influences the interest rates and link them to inflation because clearly the markets have failed and if they have failed government needs to intervene.”
But in response, Chinamasa said there were a number of factors influencing the price of money, some of which were within and others out of the banks’ control.
“I’ve on many occasions blasted the financial sector for the high cost of money,” he said.
He said high cost structures as well as the country’s risk profile negatively influenced the interest rates.
“We’re considered a high risk country. While others are charged three to four percent interest, Zimbabweans are charged eight to nine percent interest and when they put their mark-up it goes to 15 percent,” Chinamasa said.
And on government controlling the interest rates, the finance minister said: “I’ll not go that route (interest rate controls). I would rather have market friendly measures to make sure we have money that is priced fairly.”
Chinamasa said he had tasked the Reserve Bank of Zimbabwe to deal with the matter.
He said local banks were relying too much on bank charges, which were accounting for the bulk of the profits instead of interest related transactions.
He said the government was working “flat out” to address the country’s high risk profile perception. — New Ziana.
Online Reporter