Zimbabwe releases bank loans just days after policy change | Business and Economy News
Zimbabwe, which experienced hyperinflation of 500 billion percent in 2008, is experiencing a new episode of high inflation.
Zimbabwe has lifted its ban on bank lending, the central bank said, more than a week after the government froze lending in a bid it said to stop speculation against a rapidly devaluing local currency .
The government said at the time it had started investigating anonymous speculators for taking out bank loans in Zimbabwean dollars to buy foreign currency on the black market, driving down the value of the local currency.
“The Bank wishes to inform the public that the temporary suspension of lending services by banks has been lifted with immediate effect,” the central bank said in a statement on Tuesday.
He added that only organizations under investigation for abusing loan facilities would not be allowed to borrow from banks.
Business groups had warned that the loan freeze would hurt trade and deepen Zimbabwe’s economic crisis.
Last week, South Africa’s Tongaat Hulett suspended advance payments to sugarcane growers, saying it relied on bank loans to fund the payments.
“We said it [the lending freeze] was temporary. We kept our word,” government spokesman Nick Mangwana said on Twitter.
In 2019, Zimbabwe reintroduced its currency, a decade after abandoning it in favor of foreign currencies, primarily the US dollar. Since his return, the value of the local currency has risen from around 2.5 against the US dollar in 2019 to 285 against the greenback in the interbank market.
It trades much lower, close to 400 to the US dollar on a thriving black market.
Analysts say it’s time for the government to return to using the US dollar.
The loan freeze slowed the fall of the Zimbabwean dollar on the black market, although it had little effect on the official rate.
Zimbabwe, which experienced 500 billion percent hyperinflation in 2008, is currently experiencing another episode of high inflation, with year-on-year inflation reaching 96.4 percent in April from 72.7 percent in March, dragged down by the rapid devaluation of its currency.
The economy has also been affected by the lingering effects of the COVID-19 pandemic and Russia’s invasion of Ukraine.