The Reserve bank said the maximum percentage would be increased to 30 percent from June this year According to the Reserve Bank, to move is to ensure that the banking sector remains in a sound financial position.
Banks would still use their Nostro Account balances to meet some obligations such as lines of credit, trade and project finance support.
Finance Minister Tendai Biti last week ordered all banks to repatriate 75 percent of funds held in offshore accounts as part of measures to curb liquidity challenges.
Biti said the move follows consultations with the Bankers Association of Zimbabwe.
In his monetary policy statement on January 31, Reserve Bank Governor Dr Gideon Gono put a US$10 000 ceiling on cash withdrawals while transactions above the limit required notice periods of up to five days depending on the amount needed.
Biti said after consultations with the Bankers Association of Zimbabwe, government and RBZ concluded that there was need for the repatriation of all other Nostro Account balances in excess of banks’ needs, pending international payment obligations and for the purposes of taking positions in the international market.
On statutory reserves owed by the Reserve Bank to local banks, Minister Biti said Treasury will issue Discountable and Tradable Instruments to willing participant banks. The banks are collectively owed up to US$83,583 million.
He said the issuance of discountable paper instruments against the Reserve Bank Statutory Reserve liabilities was against the background of the country’s limited fiscal space.
The maturity of the instruments will range from two to four years with features such as Prescribed asset status; Liquid asset status; Half-yearly coupon; Tax exemption; Tradable and Lender of Last Resort security status.
Institutions not willing to participate in the above scheme will have the option of being issued with 15-year bonds at 3 percent per annum. Treasury will immediately establish a Sinking Fund for servicing of interest payments and maturities.
Furthermore, instruments will be introduced to fund large infrastructure projects which Government could presently not finance from the current levels of fiscal revenues.
“Hence, notwithstanding the prevailing challenges in the financial system, Treasury will be issuing Infrastructure Development Bonds to complement Budget resources set aside for the financing of the rehabilitation of infrastructure,” he said.Post published in: Business