Foreign Currency Deposits Hit US$1,94 billion

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By Alois Vinga

FOREIGN Currency Accounts (FCA) deposits grew by 103,13% in 2021, latest statistics from the Reserve Bank of Zimbabwe (RBZ) show.

FCA balances grew from US$1,27 billion in December 2020 to US$1,94 billion in December 2021, indicating resurgent confidence in the country’s banking sector.

“Revaluation due to exchange rate movements also contributed to the increase in the local currency equivalent of the FCA deposits,” the RBZ said.

The annual growth in broad money was largely due to increases of 574,75% and 270 % in credit to other financial corporations and net claims on Government, respectively. Banking sector credit to the government was mainly in the form of Treasury bill holdings by banks.

During the period, credit to the private sector rose by 198,58%, while claims on public non-financial corporations increased by 190,54%.

Credit to the private sector mainly benefited the agriculture and household sectors, which received 29,14% and 23,22% of the total credit, respectively.

The distribution and manufacturing sectors also received 13,19% and 11,88%, respectively, while credit shares for the rest of the economic sectors are shown.

“On an annual basis, broad money registered a growth of 131,83%, down from 485,55% in December 2020. The local currency deposits component in broad money grew by 161,21%,” the stats said.

The developments come against a background where the government has implemented a raft of economic measures which include the cutback in government expenditure, inception of the Reserve Bank of Zimbabwe foreign exchange auction system which have gone a long way in easing both exchange rate volatility and inflation.

As a result, the guaranteed access to foreign currency in bank accounts has also gone a long way to boost public confidence in the banking sector.

During the period under review, cash-based transactions increased to ZW$23,60 billion in December 2021.

The value of Mobile and internet -based declined to ZW$298,98 billion in December 2021, from ZW$315,43 billion in the preceding month with Card Based Transactions Card-based transactions rose by 19,22% to ZW$72,61 billion, during the month under analysis.