Recapitalise RBZ — BAZ

HARARE - Government should urgently recapitalise the Reserve Bank of Zimbabwe (RBZ) to bring stability and fairness in the banking sector, Bankers of Association of Zimbabwe (Baz) president George Guvamatanga says.

“The starting point of financial services stability is a stronger and well capitalised central bank,” he  told the  Zimbabwe High-Level Economic Forum in Victoria Falls last week.

He said the recapitalisation would, apart from reviving the much needed lender of last resort, also create fair competition as the central bank will assume its role of banker to government.

“At the moment the situation we have in the market is a moral hazard where government deposits are concentrated in few institutions,” he said, adding the few banks could start getting the feeling they are not liable to certain requirements.

“We also make a strong plea that the role of banker to government should reside in the central bank and that will allow mobilisation and fair distribution of funds and the intermediation role of the financial sector.”

Guvamatanga’s call to recapitalise RBZ comes after Finance minister Tendai Biti recently said  government was working on various initiatives, including an RBZ Debt Structuring Bill that will liberate the bank balance sheet from the $1,1 billion debt that is on its books, to capacitate the central bank.

“Once we have bifurcated the RBZ balance sheet which in fact the net status of being solvent, it means it is now easier to recapitalise the RBZ, you can’t so when you have got this huge debt of $1,1 billion,” he said.

Over the years, the central bank has been involved in many quasi fiscal activities, through which it acquired assets and businesses including for Homelink and shares in Cairns Holdings.

Biti said following amendments that were made in 2010, the RBZ board is currently disposing of these assets and any proceeds from the sale of those assets will also go towards funding RBZ.

Recently, the central bank re-invited tenders for the disposal of its shareholding in food processor Cairns Holdings Limited and paint maker Astra Industries Limited, as the central bank moves to shed quasi-fiscal operations.

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