Saturday, May 11, 2019

Sanctions are there but are not affecting the banking sector: RBZ

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A Reserve Bank of Zimbabwe (RBZ), official has dismissed claims sanctions imposed on Zimbabwe by Western powers have affected the country’s ability to transact internationally.

Nelson Mukunga, a deputy director at the Central Bank, told mining experts and government officials at the just ended International Chromium Development Association conference, in Victoria Falls that local banks have no challenges meeting their external obligations.

“Sanctions are there but are not affecting the banking sector. Yes sanctions could be affecting banks as they may be losing their corresponding relationships but currently there are no challenges in terms of settlements externally,” said Mukunga.

Mukunga’s comments are at variance with RBZ Governor John Mangudya who early this year said the sanctions have throttled Zimbabwe’s financial system.

“It’s only a few banks which can take Zimbabwe’s risk. OFAC says that the transactions from Zimbabwe should be scrutinised for compliance risk,” Mangudya said in the aftermath of the decision by US President Donald Trump to extend the embargo arguing Zimbabwe posses a threat to US foreign policy.

President Emmerson Mnangagwa and his predecessor Robert Mugabe have both blamed the sanctions for the country’s economic problems.

Last week an economic advisor to Mnangagwa, Ashok Chakravarti told a conference in the US that he had faced problems wiring money for his child’s school fees studying in that country.

A few days ago, leading clerics in Zimbabwe under the banner of the Heads of Christian Denominations (ZHOCD) called for the lifting of sanctions imposed on the country by Western powers in order to ease the suffering of citizens.

ZHOCD is made up of groups such as Evangelical Fellowship of Zimbabwe (EFZ), UDACIZA, Zimbabwe Catholic Bishops Conference (ZCBC) and Zimbabwe Council of Churches (ZCC).

Mukunga said the economy is on the mend and the country will be back on its feet after government managed to arrest inflation.

“We have noted unrestrained fiscal deficit as the cause for inflation but since this is being addressed there will be no more inflation.

“We had high inflation last month but that base effect will no longer be there as we expect inflation to reduce significantly,” he said.

The RBZ official said government is still trying to balance the exchange rate where on the parallel market the US$ and RTGS trades at US$1: RTGS$4.85 against the official bank rate of US$1: RTGS3.2.

“Since we pegged currency exchange rate in February, the currency is still trying to find its feet. We are trying to reduce that gap and also reduce supply as we stabilise the exchange range going forward,” he added.