BULAWAYO - The International Monetary Fund (IMF) has indicated that the Reserve Bank of Zimbabwe needed to be capitalised for it to play a critical role in financial sector stability. (Pictured: The incomprehensible non-funding of the RBZ severely compromised financial security in Zimbabwe)
According to a report made by a visiting IMF team in October, due to lack of funding, the central bank has continued to utilise unencumbered international reserves, further eroding dwindling state coffers. The IMF team advised the government to budget for the RBZ as part of efforts to ensure lasting stability and confidence in the countrys financial sector. The Central Bank is reported to have operated for 10 months since January this year without reserves of working capital, which would have to be provided by the financially constrained government. According to the IMF team report, “incomprehensible” non-funding of the RBZ led to the undesirable scenario where the central bank, on some occasions, had to rely on statutory reserves from the commercial banks to keep the electronic payments system running, among other critical requirements.
Following the introduction of the multi-currencies in February this year, the RBZ financial stability was severely compromised. This situation crippled its capacity to carry out the critical function of being lender of last resort to the banking sector. The RBZ is also unable to carry out open market operations that are critical in local money market liquidity management.
The Bretton Woods institution is also understood to have expressed concern on the delay by the government in coming up with a new RBZ board. The Board is expected to address corporate governance shortcomings at the Central Bank in an attempt to enhance its capacity to efficiently and professionally deliver its mandate.
Post published in: Mining