By Bernard Mpofu, HARARE, July 29 (The Source) – Zimbabwe’s Treasury plans to inject a further $150 million into the central bank to restore its lender of last resort role and confidence in the financial services sector, finance minister Patrick Chinamasa said on Wednesday.
Last year, the government injected $100 million to boost the central bank’s assets and Chinamasa told a press briefing after the announcement of the new Reserve Bank of Zimbabwe (RBZ) board that government would step up efforts to make the financial services sector sound.
The finance minister is expected to announce his midterm policy on Thursday, at a time economic activity has reached its lowest levels in five years.
“We are also under obligation as treasury to recapitalize the bank. Primarily we have already recapitalized it to the tune of $100 million but that is not adequate,” said Chinamasa.
“We hope to do more to give it another shot in the arm with $150 million that will perhaps fully capitalize it so that it can start its function as lender of last resort but that is in the future,” he said without disclosing where the funds would be sourced from.
Runaway inflation and the devaluation of the local unit saw depositors losing confidence in the banking sector after balances were eroded by the deteriorating economic environment which ended after the introduction of multiple currencies in 2009.
Parliament has already passed the Reserve Bank Assumption Bill which seeks to clean the central bank’s balance sheet by retiring a $1,35 billion debt mainly acquired through quasi-fiscal activities at the height of the country’s economic meltdown. The bill is now awaiting Presidential assent.
Economist Rita Likukuma will deputise RBZ governor John Mangudya as ex-officio chairman. Other eight board members include former Delta Corporation chief executive Joe Mtizwa, former Zimbabwe’s ambassador to Egypt Aaron Maboyi, lawyer Virginia Mudimu and chartered accountant Cornelius Maradza.