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Monetary policy highlights

Business
The policy rate was increased from 60% in January 2022 to 80% at the end of April 2022, and further to 200% on June 24, 2022.

Bank policy rates unchanged The bank policy rates have been continuously reviewed since the beginning of the year in line with exchange rate and inflation developments.

The policy rate was increased from 60% in January 2022 to 80% at the end of April 2022, and further to 200% on June 24, 2022. The increase in policy rates and its alignment to the minimum lending rate has gone a long way in reducing speculative borrowing and stabilising the exchange rate.

Deposit interest rates remain at 80% As part of measures to promote savings, the deposit rates for Zimbabwe dollar savings were reviewed upwards from 12,5% to 40% per annum, while time deposits rates were increased from 25% to 80% per annum, effective July 1, 2022.

MBA facility at 100% The Reserve Bank of Zimbabwe (RBZ) has maintained the medium term bank accommodation facility (MBA) since November 2019 in order to support strategic productive sectors such as grain production and SMEs. The MBA rate was reviewed from 40% in January 2022 to 50% in April 2022 and further to 100% on June 24, 2022.

US$834 allotted on auction system Since the introduction of the auction system on June 23, 2020, the RBZ has successfully held 104 Main and 98 SME auctions, as of July 26, 2022. In 2022, the central bank allotted about US$834,7 million, representing about 91% of the total bids submitted to the auction as of July 26, 2022. The SMEs sector continues to receive a considerable amount of funds from the auction system, with a share of about 17% in the first half of 2022, compared to a share of 11% in the same period in 2021.

Statutory reserve balances rise to $20 billion An increase in broad money saw statutory reserve balances increasing from ZW$2011 billion on January 31, 2022 to $28,89 billion as of July 22, 2022.

$986 million disbursed under SMEs facility The facility was introduced in June 2021 during the Covid-19 pandemic to support the working capital and capital expenditure needs of the MSMEs sector. As at July 22, 2022, a total of $9866 million had been disbursed to various beneficiaries through banks and microfinance institutions.

Foreign exchange mobilisation The RBZ is working with its local and external partners to unlock offshore lines of credit to support the country’s foreign currency needs. Letters of credit (LCs) issuances under the Afreximbank US$150 million facility, as well as bank facilities continued to bridge the balance of payments gap for the country through providing a critical liquidity lifeline to the local industry. LCs worth about US$145 million were issued during the first seven months of 2022.

Foreign currency receipts Total foreign currency receipts for the period January 1 to June 30, 2022 amounted to US$5.45 billion compared to US$4.07 billion received during the same period in 2021, representing a 33.6% increase. This shows a significant growth in receipts during the first half of the year. Table 3 shows the foreign currency receipts by source.

International Remittances International remittances comprise transfers by Zimbabweans in the diaspora and international organisations. As at June 30, 2022, total international remittances amounted to US$1.372 billion, an increase of 23% from the US$1.113 billion recorded during the same period in 2021. Of the total amount, diaspora remittances amounted to US$797 million, a 23% increase from US$650 million received during the same period in 2021.

Foreign payments performance For the first half of 2022, banks processed foreign payments amounting to US$3.78 billion. This represents a 19% increase in foreign payments from US$3.19 billion recorded for the same period in 2021. The upward trajectory in foreign payments was largely on account of increased global prices for fuel and electricity.