Vusumuzi Dube
Judith Phiri, Business Reporter
THE Reserve Bank of Zimbabwe (RBZ) has with immediate effect reduced interest rates from 150 percent to 130 percent per annum.
RBZ Monetary Policy Committee met on Monday and deliberated on recent macroeconomic and financial developments in the economy.
In a statement, RBZ governor Dr John Mangudya said: “With immediate effect, the Bank Policy rate has been reduced from 150 percent to 130 percent per annum and the Medium-term Bank Accommodation (MBA) interest rate for the productive sectors including individuals and MSMEs will be maintained at 75 percent per annum.”
In terms of the foreign currency retentions, he said with effect from 1 November 2023, foreign currency retentions on exports shall be standardised at the level of 75 percent across all sectors of the economy and all special dispensations granted to some sectors of the economy shall be removed.
Dr Mangudya said the net effect of the measure was to increase foreign exchange resources available to the Bank and Government to meet foreign exchange requirements for the settlement of national and international obligations.
Among other key resolutions the MPC made, he said: “On promotion of no-frills (low-cost) bank accounts, financial institutions are encouraged to scale up financial inclusion through opening of more no-frills (low-cost) accounts. This measure will promote more usage of banking services and financial products, including increased use of bank cards, digital financial services and other cash-lite means of payments in the economy.”
Dr Mangudya said in order to complement efforts to formalise the economy and to give more impetus to the use of non-cash-based means of payment in the economy, it was recommended that Government considers removing Intermediated Money Transfer Tax (IMTT) on transactions that are intermediated through plastic bank cards and other digital platforms.
He said in order to support the continuous fine-tuning and further liberalisation of the foreign exchange market, with a view to guaranteeing and safeguarding exchange rate stability, it was recommended that the limit of 10 percent trading margin above the interbank rate be removed.
On the Zimbabwe Gold (ZiG), Dr Mangudya said: “Since its introduction as a medium of exchange on 5 October 2023, the use of ZiG has been embraced widely in the economy and its continued dual use as a value preserving instrument and a medium of exchange in the economy will go a long way in supporting digitisation, financial inclusion and the overall stability of the local currency.”
He said the MPC will remain alert to attend to any emerging risks, emanating from both the domestic and international fronts, in its commitment to ensuring stability in the exchange rate and general price levels.
Dr Mangudya said the MPC was pleased with the relative exchange rate and price stability obtaining in the economy since June 2023 and noted, with emphasis, the need to ensure that inflation expectations continued to be firmly anchored through urgent attention to any emerging risks.
“The MPC also noted that there was need to continue promoting solutions that were aligned with the digital space and plastic money environment that the country found itself in and, in that regard, the MPC applauded the Bank for continuing to engender financial inclusion in a market-based and cash-lite driven economy.”
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