Print
Email ArticleThe Zimbabwean government through the Ministry of Finance has announced a $100 million fund to be availed for the Reserve Bank of Zimbabwe (RBZ) to carry out its function as a lender of last resort.
Biti is his 2012 budget statement said the fund will be jointly administered by international financial institutions and a regional financier.
“Interbank market trading remained largely inactive due to the inadequacy of financial resources required to sustain efficient operation of this function. A technical team working on the operational modalities for the Fund has already been constituted and will be communicating the terms and conditions once they have been finalised,” the minister said.
RBZ governor Gideon Gono welcomed the setting up of the fund on behalf of the bank.
“We applaud the minister for restoring our lender of last resort function at the level he has given us. We also congratulate him for a pragmatic budget which tried to give something to everyone,” Gono said.
The government last advanced $7 million to the apex bank in 2010 to enable it to provide liquidity support to banks that required it.
By last month banks were still to access the RBZ funds due to their limited nature and stringent requirements of Deeds of Transfer on immovable property as collateral.
The lender of last resort role was revived in February this year after RBZ got funding from Treasury. The central bank had last performed that role in 2008 leaving banks vulnerable in the event of problems in the sector.
A lender of last resort is an institution, usually a country’s central bank, which offers loans to banks or other eligible institutions that are experiencing financial constraints, are considered high risk or are near collapse.
The RBZ is currently saddled with a more than $1 billion debt mainly accrued due to quasi fiscal activities and has embarked on a disposal exercise of its non-core assets , including shares of listed companies such as Tractive Power and Cairns.
|
|
|
|
|
|
|
