Mangudya paints gloomy picture for local banks

Foreign financial institutions are closing offshore accounts held by local banks, exacerbating the liquidity situation in the country, Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya has said.

Addressing guests at a luncheon hosted by the St Luke's Anglican Church on the importance of the impending bond notes as a short-term measure to meeting the liquidity challenges on Sunday, Mangudya said the situation was dire.

He said one of the reasons why there was a liquidity crisis was that the country was double-dipping by using nostro accounts for foreign payments, and using the money for local cash demands.

Mangudya said since 2009, Zimbabwe had experienced a $2,5 billion trading deficit per annum, meaning to date the country has lost $20 billion.

Meanwhile, Zimbabwe's economy is projected to rebound from the sluggish 1,2 percent growth expected this year to a steely 4,8 percent driven by a cocktail of reforms and positive external factors.

According to the 2017 National Budget Strategy Paper developed by the Ministry of Finance and Economic Development, projected growth is anchored in fundamental economic assumptions that include improved performance of agriculture.

Meteorological and climate change experts for SADC have forecast normal to above normal rainfall in the next rainy season, a positive phenomenon for Zimbabwe's agriculture driven economy.

Projections say growth will also depend on increased financing for agriculture, incentives for exporters, better mineral prices, improved investment climate, re-engagement with International Monetary fund and other global funders and positive gains from measures taken to cushion local industry.

Exports are projected at $3,8 billion, against imports of$5,4 billion, resulting in a high unsustainable trade gap of over $1,5 billion.