The local banking sector is safe and free of distressed institutions, the International Monetary Fund (IMF) has said, imploring authorities to further bring down the loans default rate to bolster confidence.
BY BUSINESS REPORTER
An IMF team, which was in the country for a second review of the Staff Monitored Programme (SMP), gave a clean bill of health on the financial sector, which they say is the engine for economic growth.
“There are no longer any distressed banks, all banks now fully comply with capital requirements, nonperforming loans have declined, and the interbank market is now functioning,” head of the mission team Domenico Fanizza said.
Early this year, the Reserve Bank of Zimbabwe (RBZ) told IMF that it would rid the banking sector of distressed financial institutions by June 30.
Fanizza said completing the recapitalisation of RBZ “will enhance its ability to supervise the banking sector”. Early this year, RBZ was capitalised to the tune of $100 million through the issuance of long-dated debt instruments.
Finance minister Patrick Chinamasa recently said RBZ would be further recapitalised to the tune of $150 million to be able to resume its lender of last resort function.
RBZ is still to resume that function, six years after the introduction of the multi-currency regime.
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Fanizza said “banks are now in a better position to extend credit to the private sector, which should help economic activity”.
“However, to cement financial stability and confidence, nonperforming loans need to decline further,” he said.
