HARARE, June 25 (Reuters) – A Zimbabwean state-owned asset management company has so far taken nearly $100 million in bad loans from banks to help restore viability in the financial sector, finance minister Patrick Chinamasa has said.
The Zimbabwe Asset Management Company (ZAMCO) was created by the central bank in August to take over non-performing loans from banks that had reached $750 million and were restricting banks from providing new loans.
Smaller banks have been vulnerable to Zimbabwe’s economic downturn and are also viewed as applying less stringent rules on lending compared with bigger foreign-owned banks.
“This company, in a very short period of time, has already taken nearly $100 million from the loan book of financial institutions,” Chinamasa said, according to a transcript of Wednesday’s proceedings in Parliament.
Five local banks have closed in the last two years due to solvency and liquidity problems.
Chinamasa also said the government was not keen to fix interest rates to lower borrowing costs in the southern African country where bank interest rates are as high as 25 percent.
Zimbabwe’s government says the economy is expected to flatline this year as a result of low global commodity prices which will impact mining production, low foreign direct investment and company closures as a result of power shortages and expensive finance.