THE Reserve Bank of Zimbabwe (RBZ) will from March this year resume its role as the banker of government as it moves to restore confidence in the financial services sector.
Presenting the Monetary Policy Statement yesterday, acting RBZ governor Charity Dhliwayo said as market conditions improve, the apex bank intended to introduce repos and reverse repos to improve interbank trading and help ease attendant
“Importantly, as enunciated by the Minister of Finance and Economic Development in his 2014 National Budget, the Reserve Bank will resume its traditional function as the banker to government. Within this context, the Reserve Bank will host Government’s Exchequer Account with effect from 31 March, 2014,” Dhliwayo said. “The restoration of the lender of last resort (LOLR) facility implies that an overnight accommodation rate will be announced by 31 March, 2014 and becomes applicable for the facility. The overnight accommodation rate will be the anchor interest rate that will act as a benchmark for market rates.”
Turning to gold production, Dhliwayo said a unit of the RBZ has plans to re-apply to the London Bullion Market Association amid concerns that Treasury was not benefiting from the real value of the precious metal due to intermediaries.
Before 2006, gold produced by both small scale and large scale miners exceeded 15 tonnes. During this time, Fidelity Printers and Refiners was the sole buyer and refiner of gold and an accredited member of the London Bullion Marketers Association (LBMA). This was largely so, as the gold output realised by the country exceeded the 10-tonne annual threshold required to maintain membership with the London Bullion Metal Exchange.
Under this arrangement, gold produced and refined in the country was directly exported at the international gold prices obtaining at the LBMA, without any middlemen or intermediary. This, notwithstanding gold output, declined to levels below 10 tonnes in 2007, on the back of the general contraction in economic activity. As such, Zimbabwe could not maintain its position as a member of the LBMA, therefore we have been exporting gold through South Africa for refining.
“In line with the 2014 National Budget Statement, a wholly-owned subsidiary of the Reserve Bank of Zimbabwe was designated to resume its role as the sole buyer and exporter of gold in the country,” Dhliwayo said.
“As such, Fidelity Printers and Refiners will apply for accreditation to the London Bullion Marketers’ Association once they refine gold in excess of 10 tonnes per annum. Notably, the framework would pave way for the country to directly export refined gold to the international market, build gold reserve buffers as well as resuscitate the domestic jewellery industry.
Furthermore, the company is working on modalities of entering into hedging arrangements which will ensure that they buy gold at favourable prices even during times when the price of gold is declining.”
Dhliwayo said Fidelity will open buying centres in addition to the ones available in Harare, Bulawayo, Kadoma, Kwekwe, Gweru, Gwanda, Filabusi, Zvishavane, Masvingo and Mutare.