Kudakwashe Chideme, News Editor 
ZIMBABWEAN banks and industry are sceptical about the government’s plan to pump $18 billion in rescue loans into the struggling economy amid fears that the move could stoke inflationary pressures.
Local firms have for long been pressed for liquidity and the situation has been heightened on account of disturbances to business caused by the Covid-19 pandemic-induced national lockdown.
But the banks, which already are reluctant to lend to business, fear that the stimulus package might increase monetary supply and upset the prevailing relative exchange stability.
“Halt liquidity injections through concessionary finance facilities. There are more disadvantages to this measure than advantages. It is imperative for the policymakers to provide a stable, predictable and conducive macroeconomic environment,” the Bankers Association of Zimbabwe noted in part of their submissions to the treasury ahead of next year’s national budget.
“The current interest rate framework and expansionary monetary policy largely negates efforts to stabilise the exchange rate. We therefore recommend the tightening of monetary policy in order to thaw inflationary and speculative purposes that could emanate from cheap credit”.
To support the tightening, the bankers also recommended the elimination of the multiple subsidies which would in turn ease the fiscal burden on the government finances.
The government announced plans for the rescue package back in April but six months later nothing has materialised in an apparent indication that authorities might not be too keen to follow through on their pledge.
According to the country’s largest business member organisation, the Confederation of Zimbabwe Industries (CZI), the package is still yet to be availed.
“Companies indicated that no funds were accessed under the rescue package. More focus was on ensuring minimal disruptions to business operations with what was available on hand,” the CZI said in its own submissions to the treasury.
Earlier in the year the government placed strict restrictions on mobile money transactions and launched an auction platform for foreign currency.
The moves have curbed growth in monetary supply which in turn has also tamed a previously thriving parallel market for the greenback.
