Zimbabwe: Shock As 50 Firms Cling to Half of Country’s Bank Balances
Reserve Bank of Zimbabwe (RBZ) says only 50 companies operating in the country are holding half of the total $19 billion balances held across the country’s banking sector, posing a high risk of manipulation and pushing up exchange rates on the parallel market.
He was addressing the media just after presiding over the Monetary Policy Committee (MPC) in Harare, Tuesday.
The central bank chief said it was important for authorities to monitor the flow of money from the companies’ accounts to avoid associated risks.
“Almost 50% of the total $19 billion bank deposits are held by only 50 companies, which means the rest of the populace has little amounts in their bank accounts.
“The central bank therefore needs to closely monitor the flow of money from these accounts to avoid risks which may lead to the spiralling of the exchange rates,” he said.
Zimbabwean authorities have come under fire for allegedly allowing certain individuals and firms linked to the Zanu PF led administration to engage in illegal foreign currency dealings with no consequences against the culprits.
Last month, RBZ’s Financial Intelligence Unit closed in on accounts held by Sakunda Holdings and its subsidiary firms amid concerns they were heavily involved in illegal foreign currency dealings.
The move was ostensibly to facilitate an “analysis” into the operations of the companies.
Nothing of any findings has since been placed in the public domain, raising further fears some authoritative figures could be complicit with any illegal goings-on within the system.
Sakunda Holdings owner, Kuda Tagwirei is a close ally to President Emmerson Mnangagwa.
Meanwhile, MPC also raised concerns over the increase in reserve money which grew 80 % during the first eight months of 2019, when compared to the December 2018 position.
This has caused instability in the exchange rate, something that has had knock-on effects on the pricing of goods and services.
It was agreed measures should be implemented to ensure money supply growth is contained within levels that will ensure exchange rate stability and inflation reduction.
Said the governor, “The committee noted with satisfaction the decrease in reserve money by a 10 percentage points in September 2019 from the August 2019 position and agreed to continue on this trend to ensure that reserve money growth is contained to 50 % for the full year 2019.”
Concerns were also raised over the unequal distribution of money supply, which is heavily skewed towards a few corporates.
The committee resolved to address the challenge of unequal distribution of money supply through appropriate money market instruments which will re-distribute liquidity.
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