HomeNewsGovt must inject $100m in RBZ — CZI

Govt must inject $100m in RBZ — CZI

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Confederation of Zimbabwe Industries (CZI) says the government should inject $100 million into the Reserve Bank of Zimbabwe (RBZ) to enable the central bank to undertake its supervisory role and resume final lender duties.

In its submissions to the government on the forthcoming mid-term fiscal policy review, CZI said there had been concern over the capacity of the central bank to play its oversight role following placing under curatorship of ReNaissance Merchant Bank.

“There is need to recapitalise RBZ to the tune of $100m in the second half of this year to ensure that the central bank is able to undertake its supervisory role as well as partially undertake its role of the lender of last resort,” read part of the submissions by CZI.
The RBZ was in the process of disposing it’s non-core assets and shareholding in seven companies, a move expected to raise funds to clear its debt.

CZI said funds trapped and debt accrued at the central bank remained contentious. Both outstanding issues should be dealt with as a matter of urgency.

CZI said the government should issue tradeable tax credit certificates people would use in lieu of payments of tax heads.

“The modalities of such a scheme would need to ensure that the impact on revenue for the government is limited as the government is already operating with limited fiscal space,” said CZI.

“Conversion of debt into long-term bonds and identification of government assets for privatisation earmarking proceeds to extinguish RBZ debt (should be encouraged).”

The central bank owes local companies and non-governmental organisations $1,1 billion after the money was unilaterally garnished from their foreign currency accounts between 2004 and 2008 by RBZ governor Gideon Gono.

Turning to the issue of coins, CZI said the problem of change was persisting hence the need to find an alternative solution.

“Retail outlets have developed their own change vouchers that have been accepted by the public, the government can mint its own coins that are dollar-backed,” said CZI.

“In addition there is a need to ensure measures are put in place by the government and the banking sector to encourage the use of plastic money and introduction of smart cards by all banking institutions.”

Last month the International Monetary Fund (IMF) said rising vulnerabilities in the banking sector needed to be addressed by stepping up supervisory efforts and better enforcing compliance with prudential requirements.

In its report on the state of the country’s economy, IMF said the RBZ should move to intervene swiftly to deal with banks that fail to restore compliance with minimum capital requirements.

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