Zim allocates $150m to stabilise forex accounts

Harare - The Zimbabwean central bank says it has stabilised nostro accounts with a $150m facility from Afreximbank after the Zimbabwe National Chamber of Commerce said foreign investors were stranded on the local stock market.

A nostro account is a bank account held on behalf of local finance institutions by international banks. The nostro accounts are used to receive and settle international payments by the local bank on behalf of its clients.

"We are now prisoners of the past and we fear the things that have happened in the past. On Monday we got $150m from Afreximbank to stabilise nostro accounts," Reserve Bank of Zimbabwe governor John Mangudya said on Thursday.

Zimbabwean banks have started to witness worsening liquidity constraints, with cash queues at banks growing longer and some banks running out of cash.

The depletion of balances in the nostro accounts has also affected local businesses, as companies are now unable to speedily effect international purchases. Reports say the central bank has a backlog of more than three months for international payments.

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Mangudya said although the central bank is set to introduce local bond notes, the government is maintaining the multiple currency system.

He said businesses complaining about lack of cash in the economy are not exporters. Fuel companies such as Total Zimbabwe and Engen are using up about $60m each month to import petrol by using foreign currency earned by exporters such as platinum and gold producers, said Mangudya.

"The more you insult me, the more I see the depth of ignorance in this economy. We do not produce foreign currency here and we have to earn it," he added.

The president of the Zimbabwe National Chamber of Commerce, Davison Norupiri, said the central bank is not explaining bond notes effectively. He added that this is causing confusion and panic in the economy.

READ: Zimbabwe to introduce bank notes in October

He also said the cash shortages are trapping foreign investors on the equities market inside Zimbabwe, as they are encountering difficulties in remitting their earnings from investment activities.

"We cannot hide the fact that the current environment has battered us. Foreign investors on the ZSE are trapped inside," Norupiri said.

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He explained that there is no common understanding of the bond notes issue as "some see it as a way of dealing with cash shortages" while others view it as "an unscrupulous means to bring back the Zim dollar".