Zimbabwe’s Reserve Bank Orders Banks NOT To Lend Money To Anyone, Including Government
The Reserve Bank of Zimbabwe has ordered banks and financial institutions in the country not to lend money to anyone, including the government and private individuals.
The central bank made the pronouncement following President Emmerson Mnangagwa’s address to the nation on Saturday.
In the address, the President ordered banks not to lend money to private individuals and government departments to arrest the country’s economic decline. According to the Sunday Mail, this is part of the measures to defend the Zimbabwe Dollar, which has been depreciating badly.
The central bank has since issued a communique to all the banks ordering them to stop giving any loans. This order applies to both local currency and foreign currency.
The reserve bank also said that all loans that were in the pipeline would be allowed on a case by case basis.
Below is the complete statement from the Reserve Bank of Zimbabwe ordering banks not to lend money to anyone.
9 May 2022
To: Chief Executive Officers/ Managing Directors
All Banking Institutions, Development Finance Institutions, Deposit-Taking and Credit Only Microfinance Institutions
RE: NEW MEASURES TO RESTORE CONFIDENCE, PRESERVE VALUE AND RESTORE MACROECONOMIC STABILITY
1. We refer to the National Announcement of 7 May 2022, made by the President of the Republic of Zimbabwe, His Excellency Dr. E. D. Mnangagwa, on Measures to Restore Confidence, Preserve Value and Restore Macroeconomic Stability, and the subsequent meeting of representatives of the banking sector with the Governor held on 9 May 2022.
2. We bring your attention to paragraph 40 of the Presidential Announcement on the suspension of lending by banking institutions, building societies, development finance institutions, deposit-taking and credit-only microfinance institutions to the Government and private sector. For the avoidance of doubt, this suspension relates to all lending, whether local currency or foreign currency, to Government and the private sector, including corporates, other legal entities and individuals.
3. We further confirm that no new credit facilities should be issued as the suspension covers new loans, undrawn portions of agreed facilities, overdrafts and other forms of borrowing instruments, by whatever name they are called.
4. With respect to pipeline transactions, where all the facility terms and conditions have been met before the above pronouncement, institutions may approach the Reserve Bank for consideration, on a case by case basis.
5. Please take note that the suspension of lending does not apply to offshore drawdowns.
6. The Reserve Bank will monitor compliance with the above directive and will take appropriate supervisory action against any non-compliant institutions.
7. We advise accordingly.
P. T. Madamombe Director, Bank Supervision
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