Zimbabwe: government under fire for criticism for suspending bank credit

This loans will promote the development of a parallel banking system and jeopardize the economic recovery of a country in full slides.

Le Monde with AFP

The government of Zimbabwe has been under the fire of criticisms since Saturday, May 7 for imposing a freeze on bank loans, a decision that will promote the development of a parallel banking system and jeopardize the economic resumption of a country In the middle of the slides, warned business circles on Monday.

President Emmerson Mnangagwa ordered banks on Saturday to suspend their credit activities, as part of a recovery plan of the country undermined by a rampant inflation nourished by the war in Ukraine and the flight prices for raw materials .

a highest key rate in the world

At the beginning of April, the Central Bank of Zimbabwe noted, to curb inflation, its main key rate from 60 % to 80 %. This rate is currently the highest in the world and constitutes an absolute record for this southern African country, according to the Bloomberg financial agency.

The freeze of banking credits aims, according to the executive, to put a stop to speculation against the Zimbabwean currency which has been negotiating in recent days on the market parallel to nearly $ 400 Zimbabweans for an American dollar, more than double its official rate.

The Chamber of Commerce and Industry, for its part, castigated in a press release the decision of the executive which “legitimizes a banking system parallel to usurious rates”. “No investor will be interested in an economy where we can freeze bank credits overnight,” she warned.

The country’s main banks have started discussions on Monday with the Central Bank. Shepard Ngandu, a union official in the banking sector, stressed during these discussions that “credit is the first source of income from a bank”.

The Zimbabwe economy has been immersed for more than twenty years in a deep crisis which has notably led to a withdrawal from international donors due to unbearable debt. The rise in prices of basic necessities has recently worsened with the conflict in Ukraine, while Russia is the country’s leading supplier of the country.

/Media reports.