Lending suspension wont affect food production – RBZ

Lending suspension wont affect food production – RBZ

Staff Writer

The recently announced suspension of lending by financial institutions does not apply to institutions and processes which finance the production of food in the country, the Reserve Bank has said.

There have been fears that the timing of the announcement is coinciding with the preparatory stages of winter wheat, winter maize (under irrigation) and maize production which are largely credit financed.

However, the Reserve Bank of Zimbabwe set the record straight in a statement yesterday saying banks had already been told that marketable commodities will not be affected.

“Suspension of lending facilities does not apply to marketable commodities such as tobacco, cotton, sugar, maize, etc. All banks have been advised accordingly,” the RBZ said in a statement shared through their Twitter.

In an interview with The Herald, Finance and Economic Development Minister Professor Mthuli Ncube said the suspension of lending, which is largely used for working capital by businesses will be painful in the short term but will bring long term joy in the market.

Minister Ncube said they have found common ground with business on the measures.

“On the temporary suspension of bank lending, the aim was to prick the speculative bubble on the parallel market, but also to prick the speculative bubble on the stock market. We realised that the two (parallel and stock markets) are now related.

When that happens, Government has to act. It is also good for business to have a stable exchange rate, stable and not rising prices. They have to understand that we are pricking the bubble and once that bubble bursts, stability will open up bank lending. But we have a common view about the direction of building a strong, growing economy. This can be done by business with our support,” said Minister Ncube.

Since the introduction of the measures, the parallel exchange rate has not moved showing that there is merit in the painful but necessary decision taken by Government to arrest market indiscipline.