Confusion Rocks Zim Banking Sector
…BancABC distances self from leaked position paper accusing govt of hurting the bank’s incomes
….Meaasures are temporary, says central bank governor John Mangudya
The Zimbabwean financial services has been plunged into further confusion as BancABC distances itself from a paper circulating in the public domain where it reprimanded government for hurting bank incomes.
This comes as the Bankers Association of Zimbabwe (BAZ) remains tight-lipped about government’s unprecedented moves on the banking sector. BAZ is yet to speak on measures widely viewed as hurtful to the banking sector and livelihoods.
Hours before BancABC distanced itself from the paper shared on social media, which sources attributed to the bank’s internal executives,the bank said suspension of bank lending could wipe out between 20-50% of banks’ incomes.
BancABC had warned that banks could be pushed into engaging in ‘non permissible’ activities to recover lost income.
“This could push banks to embark on risk and/or non-permissible activities to compensate for the loss of incomes…No economy can survive without access to working capital,” the paper reads.
In a move that betrays ‘gagging’ and interference from the central bank, BancABC says the paper does not reflect, “the position of the Bank, it board and management.”
Further explained:”The bank is in fully aligned with the direction issued by monetary authorities.”
On May 7, President Emmerson Mnangagwa announced a cocktail of measures aimed at stabilizing the rapidly depreciating local currency. The measures included an indefinite suspension of lending by banks.
Mnangagwa also announced that a 2% tax would continue to apply to local currency transfers. Domestic foreign currency transfers to attract 4% Intermediate Money Transfer Tax (IMTT).
“The high IMTT effectively means that the market will avoid depositing the US$ into the banking system. This will increase informalisation of the economy as transactions will be on a cash basis and outside the formal channels,” further reads the paper.
Central Bank governor, John Mangudya said the measures were ‘temporary’.
“We know this is a painful, but necessary, measure. It was necessary because of the increase in inflation. Some entities were now using funds from banks to purchase foreign currency,” Mangudya told the ZBC.
“It’s a temporary, necessary measure to ensure that there is sanity in terms of taming inflation.”