By Alois Vinga
THE Reserve Bank of Zimbabwe (RBZ) Monetary Policy Committee (MPC) has injected $2.5 billion towards the winter wheat farming season.
Deliberations made by the new MPC favoured maintaining the current stability, capping on lending interest rates and strengthening support towards Small to Medium Enterprises.
“As part of measures aimed at buttressing the current stability, the committee increased the amount of the Medium-term Bank Accommodation facility by an additional $2.5 billion to cater for the winter wheat planting programme,” RBZ governor, John Mangudya said.
The current conservative monetary targeting framework, anchored on 22.5% reserve money quarterly targets by keeping the bank policy rate and the MBA facility rate at 40% and 30% respectively, was maintained.
The MPC encouraged bureaux de change to support Micro, Small and Medium Size Enterprises (MSMEs) which require foreign currency for their various productive requirements at levels below the minimum qualifying threshold of the SME foreign exchange auction system.
The MPC also resolved to put in place a term lending facility to assist funding needs of SMEs benchmarked on the experiences of other central banks, interest rate at which banks can on-lend the proceeds from the MBA Facility at 10% above the borrowing rate to ensure recovery of the productive sectors.
RBZ achieved major milestones especially the implementation of a monetary targeting framework, which has been successful in containing reserve money growth, and the introduction of the foreign exchange auction system which has resulted in the current stability of the exchange rate.
To date, inflation has declined from 837.5% in July 2020 to 240% in March 2021.
Similarly, monthly inflation fell from a peak of 35.53% in July 2020 to 2.26% in March 2021.
“The MPC also resolved to put in place a term lending facility to assist funding needs of SMEs benchmarked on the experiences of other central banks,” Mangudya added.