THE Zimbabwe National Chamber of Commerce (ZNCC) has recommended that the Reserve Bank of Zimbabwe (RBZ) lower the bank policy rate to 20%, from the current 35%, to help alleviate market credit constraints.
The push, which is meant to align the bank policy rate with inflation dynamics, comes as the economy is facing a severe liquidity crisis amid tight monetary and fiscal policies meant to bolster the Zimbabwe Gold currency.
The measures have created a liquidity squeeze amid fears that it would constrain production.
Such policies are causing the RBZ not to be able to meet foreign currency obligations of local banks, as revealed in Parliament in May.
These hawkish policies included the RBZ increasing the bank policy rate to 35% from 20% to curtail speculative borrowing.
“The central bank should consider reducing the bank policy rate from 35% to approximately 20%,” ZNCC said in its latest report, which contains its recommendations to the RBZ.
“This adjustment would help alleviate credit constraints on productive sectors, while still maintaining a real positive interest rate.”
ZNCC also called for a reduction in the statutory reserve requirements.
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“The recent increases of 15 percentage points for local currency and 10 percentage points for foreign currency reserves may exacerbate the liquidity strain,” ZNCC said.
“The authorities should re-evaluate these levels to balance liquidity provision with financial stability.”
The current reserve requirements for savings and time deposits for both local and foreign currency are 15%, with the reserve requirements for demand and call deposits for both local and foreign currency at 30%.
The chamber noted that while the 2025 Monetary Policy Statement reflects the RBZ’s commitment to fostering price, currency and exchange rate stability while pursuing broader economic growth, there was a need to strike a balance.
“However, the effectiveness of the proposed measures will depend on their practical implementation, market confidence and coordination with fiscal policies,” ZNCC said.
“While the statement outlines key interventions, including efforts to build foreign exchange reserves, enhance exchange rate flexibility and support productive sector financing, concerns remain over sustained inflationary pressures, constrained liquidity and the long-term sustainability of the ZiG.”
ZNCC’s recommendations were made during its annual congress held in Victoria Falls recently.
Banker and financial expert Tawanda Nyambirai said the special reserve requirements were higher than those in the region.
“Let’s look at South Africa. The special reserves are 2,5%. Which means the cost of money for banks in South Africa is much lower than it is for banks in Zimbabwe because when you calculate the cost, if you lend money, you have to take into account the amount of money that is housed and is gathered and collected in Zimbabwe,” he said.
Nyambirai said under such conditions, local banks would not be able to trade at reasonable levels.
