COVID-19 is expected to cause some negative challenges to the productive sector in Zimbabwe, with producers limiting the number of workers to below 100, a directive given by the government control spread of the pandemic.
Workers are being assigned to work from home where possible to avoid large groups of people.
Other companies have to pour unbudgeted funds to acquire special protective equipment for workers.
Following developments concerning the pandemic, the Monetary Policy Committee (MPC) of the Reserve Bank of Zimbabwe (RBZ) met on Tuesday, this week and resolved to respond to the needs of the economy.
The MPC’s response, according to Central Bank governor Dr John Mangudya is increasing the medium Term Bank Accommodation Facility for supporting productive sector activities by an additional ZW$ 1 billion to ZW$2.5 billion. Financial accommodation means a financial benefit or assistance to obtain a financial benefit arising from or as a result of a loan.
“The additional amount will be targeted at financing the 2020 winter wheat planting programme,” Mangudya says.
The MPC also resolved to reduce the Statutory Reserve Ration from 5% to 4.5% in order to free some funds to the banks
to enhance their lending activities. Reserve ratio is the portion of reservable liabilities that commercial banks must hold onto, rather than lend out or invest.
One of the resolutions from the MPC meeting was to also reduce the RBZ’s Policy rate from 35% to 25% with the expectation that banks will also follow suit and adjust their lending rates to meet the requirements of their customers that are
being adversely affected by the pandemic.
Another resolution by the committee is the issuance of the Open Market Operations (OMO) Corporate Bills to enhance the monetary targeting framework that is necessary to support the exchange rate and to stabilise prices in the economy.
