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Zimbabwe central bank increases ZiG liquidity to ZWG2bn
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The Reserve Bank of Zimbabwe (RBZ) has raised the daily Zimbabwe Gold (ZiG) liquidity in the market from ZWG1.5 billion to ZWG2 billion in a move aimed at easing concerns over currency shortages and boosting economic activity.
The development was announced by RBZ Deputy Governor, Dr. Innocent Matshe, during an address in Victoria Falls on Thursday, where he sought to dispel growing fears of a liquidity crunch affecting businesses across the country.
"There is enough ZiG liquidity in the economy. We have increased the liquidity to ZWG2 billion from ZWG1.5 billion in October last year in an effort to oil the market," said Dr. Matshe.
The central bank's intervention comes at a time when businesses have been voicing frustration over limited access to credit and tight financial conditions, which they blame on the RBZ's restrictive monetary policy.
Despite the liquidity boost, Dr. Matshe emphasized that the central bank would maintain a tight liquidity stance going forward to safeguard the stability of the local currency. He highlighted the importance of responsible liquidity management in sustaining economic growth.
"Good liquidity management is essential in supporting economic activity and ensuring that the ZiG remains stable," he said.
Dr. Matshe also urged banks with excess liquidity to engage in interbank lending with those facing shortfalls, in a bid to close market gaps and ensure funds circulate more efficiently.
However, business leaders remain cautious. Zimbabwe National Chamber of Commerce (ZNCC) president, Tapiwa Karoro, challenged the central bank's optimism, arguing that increased liquidity alone does not guarantee improved access to credit.
"High levels of surplus liquidity in banks may indicate structural inefficiencies, such as risk aversion in lending, high interest rates, or stringent borrowing conditions that deter businesses from accessing credit," Karoro said.
He called on the RBZ to work closely with the financial sector to address the root causes of credit inaccessibility and support productive sectors of the economy.
The new liquidity injection is expected to ease transactional pressures in the short term, but analysts say its success will depend on whether banks adjust lending practices to meet the needs of struggling businesses.
The development was announced by RBZ Deputy Governor, Dr. Innocent Matshe, during an address in Victoria Falls on Thursday, where he sought to dispel growing fears of a liquidity crunch affecting businesses across the country.
"There is enough ZiG liquidity in the economy. We have increased the liquidity to ZWG2 billion from ZWG1.5 billion in October last year in an effort to oil the market," said Dr. Matshe.
The central bank's intervention comes at a time when businesses have been voicing frustration over limited access to credit and tight financial conditions, which they blame on the RBZ's restrictive monetary policy.
Despite the liquidity boost, Dr. Matshe emphasized that the central bank would maintain a tight liquidity stance going forward to safeguard the stability of the local currency. He highlighted the importance of responsible liquidity management in sustaining economic growth.
Dr. Matshe also urged banks with excess liquidity to engage in interbank lending with those facing shortfalls, in a bid to close market gaps and ensure funds circulate more efficiently.
However, business leaders remain cautious. Zimbabwe National Chamber of Commerce (ZNCC) president, Tapiwa Karoro, challenged the central bank's optimism, arguing that increased liquidity alone does not guarantee improved access to credit.
"High levels of surplus liquidity in banks may indicate structural inefficiencies, such as risk aversion in lending, high interest rates, or stringent borrowing conditions that deter businesses from accessing credit," Karoro said.
He called on the RBZ to work closely with the financial sector to address the root causes of credit inaccessibility and support productive sectors of the economy.
The new liquidity injection is expected to ease transactional pressures in the short term, but analysts say its success will depend on whether banks adjust lending practices to meet the needs of struggling businesses.
Source - Business Times
