The ongoing easing of monetary policies by global central banks is expected to benefit Zimbabwe’s economy through reduced borrowing costs and potentially increased credit expansion.
According to CBZ Holdings Limited’s (CBZHL) trading update for the nine months ended September 30, 2024, the reduction in global interest rates, led by the European Central Bank, the Bank of England, and the US Federal Reserve, is anticipated to filter to developing countries, including Zimbabwe.
“Most advanced countries’ Central Banks began reducing their policy rates, led by the European Central Bank ‘ECB’, the Bank of England, and the US Federal Reserve ‘Fed’.
Despite the gradual approach to monetary easing, the reduction in global interest rates is expected to somewhat filter to developing countries through a partial reduction in the cost of funds,” CBZHL Group Chief Governance Officer Rumbidzayi Angeline Jakanani said.
“Going forward, global interest rates are expected to gradually soften, as Central Banks forge ahead with managed monetary easing. This will present relief to borrowers thereby stimulating credit expansion and economic activity.”
Locally, the Reserve Bank of Zimbabwe’s Monetary Policy Committee (MPC) has implemented measures to stabilize inflation expectations and alleviate pressure.
These measures include a 44% devaluation of the local currency, a policy rate increase to 35%, and standardized Statutory Reserve Requirements.
The central bank also announced an increase and standardisation of Statutory Reserve Requirements (SRR) for both local and foreign currency demand deposits from 15% and 20%, respectively to 30%, an increase in the SSR for both local and foreign currency savings and time deposits from 5% to 15%.
In addition, the MPC lowered the limit on cash that individuals are allowed to take outside the country from US$10,000 to US$2,000.
CBZHL reported a profit after tax of ZWG1.01 billion and total income of ZWG2.68 billion for the period. The group’s loan portfolio stood at ZWG8.90 billion, with a deposit base of ZWG18.51 billion.
Zimbabwe’s fiscal authorities are expected to present the 2025 National Budget in the fourth quarter, with favourable factors such as normal rainfall, firming gold prices, and ongoing infrastructure projects supporting economic growth.
“In Zimbabwe, the fiscal authorities are expected to present the 2025 National Budget during the fourth quarter of the year, with prospects of normal to above-normal rainfall, firming gold prices and continued infrastructure projects anchoring economic activity and growth.
“The Group will continue to deploy its capital towards unlocking long-term value for its stakeholders,” Jakanani further stated.
