The government of Zimbabwe has allocated US$7 million to the Reserve Bank of Zimbabwe so it can resume making overnight loans to financial institutions as one of its core central banking functions.
Finance Minister Tendai Biti and RBZ Governor Gideon Gono told reporters late this week that the use of the overnight funds will be monitored by an independent committee. Observers said the Finance Ministry released the funds in response to calls by the International Monetary Fund for the restoration of central bank functions.
Sources said an IMF team now in Harare was likely to wrap up its latest consultative visit on Friday.
Commentator Bekithemba Mhlanga told VOA Studio 7 reporter Gibbs Dube that while the cash injection is small it will help the struggling banking sector. “Zimbabwean banks will now have a lender of last resort, but all this depends on the administration of the funds sourced from the Finance Ministry,” Mhlanga said.
The country's banks are currently holding an estimated US$2 billion in deposits. Most of them have lending rates as high as 30 percent in an economy crippled by liquidity problems arising from the multi-hard currency monetary regime.