admingoing into the second quarter, economic analysts have said.
The central bank requires at least $150 million to perform its core function and participate in financial intermediation by determining policy rates to influence market interest rates.
As part of efforts to restore the lender of last resort facility to the central bank, Government recently injected $20 million into RBZ to further boost an existing $7 million.
In addition, the Ministry of Finance was in discussion with the African Export-Import Bank to advance a $100 million facility to rekindle the lender of last resort function.
“The absence of resources to capacitate the central bank so that it performs its lender of last resort function is expected to continue until the required funding is secured.
“The unavailability of money market instrument has also resulted in the RBZ not being able to play its critical role,” said BancABC group economist, Mr James Wadi in a telephone interview from Harare.
He said the money market instruments that could be harnessed to capacitate the central bank included issuing of short-term traded treasury bills among the local banking institutions.
This, he said, would also ease liquidity challenges on the market.
Another economic analyst, Mrs Chipo Warikandwa said:“The status of credit lines that the country has been promised has taken much time than anticipated to be realised resulting in liquidity crisis in the economy. We expect to see efforts to resuscitate the lender of last resort function by the central bank persisting into the second quarter,” she said.
Mrs Warikandwa said because of limited foreign direct investment into the economy, Zimbabwe was compelled to embark on initiatives to revive the economy using own resources that were scarce at the moment.
In a commentary, Kingdom Financial Holdings Limited has said the undercapitalisation of the RBZ had compromised the institution’s efforts to successfully introduce a risk free debt instrument onto the market.
“Its lender of last resort function is expected to remain in limbo going into the second quarter of 2012.
“It is imperative for the central bank to be able to introduce a debt instrument onto the market that can be used as security when financial institutions borrow from the institutions,” said KFHL.
The Competition and Tariff Commission economist, Mr Dennis Chinoda, said the resumption of the lender of last resort function would improve liquidity.
“We hope all measures announced by the central bank, including efforts to raise $73 million by the
Government and the establishment of the Special Purpose Vehicle, where institutions in the financial sector contribute towards a fund will come to pass.
“This will improve the liquidity situation in the country and eliminate all challenges regarding to proper functioning of the Real Time Gross Settlement system.
“We also hope that the borrowing costs will lower and more Zimbabweans will be able to access long-term finance which is very vital for the future of business, the benefits trickling down to every citizen.
“The coming quarter might not be easy but we hope all policy instruments be expedited to ensure we come on our feet again in the best possible of time,” he said.
Online Reporter