Zimbabwean banking sector remains safe and sound despite the on-going economic global shocks that have rattled markets in the past two years.
In an unaudited Condensed Interim Financial Statement for the six months ended 30 June 2022, Nedbank Zimbabwe Chairman Shepherd Shonhiwa said although global disruptions such as the Russia and Ukraine crisis posed a risk to correspondent banking relationships, Government financial policies had managed to keep the banking sector afloat so far.
“The Zimbabwe banking sector remains safe and sound amid the on-going global disruptions that have rattled market over the past two years. The current conflict between Russia and Ukraine and the subsequent sanctions imposed on Russia’s financial institutions pose a risk to some of the corresponding banking relationships.
“Uncertainty remains due to the evolving nature of the shocks that have been affecting markets but the continued efforts by our Government and the Central Bank have buoyed the banking sector resilience thus far. Overall foreign currency performance has registered growth, with deposits recording a 139% increase in the first quarter, which is an indication of improved confidence in the country’s banking sector,” said Shonhiwa.
According to Shonhiwa, Zimbabwe’s economy is projected to recover in the medium term with a projected Gross Domestic Product (GDP) projected growth of up to 5.5% in 2022 and will slow down in the medium term or 5.2% in 2023. Export market is also expected to increase in 2022 owing to the booming global market and demand for minerals like gold.
To counter various market shocks, the Government through the Reserve Bank of Zimbabwe (RBZ) continuously refined foreign exchange market through the introduction of the willing buyer willing seller market in a bid to moderate stress on the foreign currency auction system as well as create a mechanism for price discovery. The auction system further buoys the economy resulting in the RBZ allocating a total of US$740.70 million as of 30 June 2022.
Key pronouncements made by the Government to counter inflation and stabilise the exchange rate during the six months period include, temporary suspension of lending entrenchment of the multicurrency system and introduction of the gold coins as a store of value plus the increase in the bank policy interest rate from 80% to 200%.