Pilloried by economists not so long ago as a wellspring of hyperinflation, the Reserve Bank of Zimbabwe is reported to be insolvent and close to collapse, a situation experts blame on its practice of funding government operations rather than managing the money supply and safeguarding price stability.
The institution is said to be under pressure from creditors include a number of non-governmental organizations and private companies whose hard currency accounts were plundered in years past to fund state operations or those of the former ruling ZANU-PF party of President Robert Mugabe.
Economists say the bank’s liabilities far outstrip its assets and that urgent steps must be taken if the central bank is to survive. Others, however, say shuttering the Reserve Bank would in fact be a step forward for Zimbabwe.
For perspective on the Reserve Bank crisis, VOA Studio 7 reporter Sandra Nyaira turned to economist Eric Bloch of Bulawayo and Prosper Chitambara of the Labor and Economic Research Institute of Zimbabwe.
Bloch blamed the former ruling ZANU-PF government for forcing RBZ Governor Gideon Gono to print Zimbabwean dollars with abandon, leading to the balance sheet meltdown said to be in progress at the central bank.
But others blame Gono for the dire economic straits into which the country fell over the past decade culminating with the second-highest inflation rate on record and massive unemployment.
The former opposition Movement for Democratic Change formation of Prime Minister Morgan Tsvangirai has been demanding that Gono be replaced, but President Robert Mugabe has adamantly refused to sack the man who kept his government running for years with few visible means of support.