By Alois Vinga
THE Reserve Bank of Zimbabwe (RBZ) Thursday increased the daily withdrawal limit to $2 000 and moved to put in place a raft of measures aimed at maintaining prices and economic stability.
In a Monetary Policy Statement delivered under the theme ‘Staying on course in fostering price and financial system stability”, the central bank emphasised the need to maintain and strengthen its resolve to dealing with price instability and addressing financial indiscipline.
“Cash withdrawal limits have been increased to $2 000 for individuals while mobile banking transactions remain capped at ZW$5 000 per transaction and an aggregate limit of $35 000 per week.
“This measure will enable the transacting public to continue conducting small transactions using cash, whilst large transactions are conducted through electronic banking,” RBZ governor, John Mangudya said.
The move is aimed at limiting the capacity of illegal foreign currency dealers to push large volumes via the electronic system in what has in the past triggered a national price spiral.
The bank policy rate for overnight accommodation from the current 35 to 45 % per annum and medium-term lending rate for the productive sector from 25 to 30 % per annum.
The decision on interest rates takes into account current liquidity conditions in the market and the need to continue controlling speculative borrowing as a disciplinary measure.
Statutory reserves will also be increased from 2.5% to 5% for demand and call deposits and maintaining 2.5% for time deposits.
The move will ensure there is a generous amount of liquidity in the economy as well as help banking institutions earn more profits through maximum lending opportunities.
“The current stability in inflation and exchange rate needs to be safeguarded, maintained and sustained,” said the apex bank in its policy statement.
“The reserve money target of 22.5% is consistent with the targeted end of year inflation of below 10% and the projected 7.4% economic growth rate of the economy.”
Sustenance on the auction system through the 40% export surrender requirement, 20% domestic foreign exchange sales proceeds surrender requirement and 15% foreign exchange contribution from the fiscus was also maintained.
RBZ also committed to putting in place a definitive programme for accounting and clearing of the foreign exchange obligations under the blocked funds and foreign exchange legacy-debt framework.
Banking institutions were also directed to pay interest on call, demand, savings deposits and mobile banking trust accounts at rates prescribed under the regulations as opposed to the current scenario where clients are losing more than they are benefitting from their deposits.
The MPS argued that new $50 notes set to be introduced soon will not in any way contribute towards inflationary pressures.