In order to correct the mismatch between the expected Nostro position, the Reserve Bank of Zimbabwe has arranged $215million stabilisation facilities from international financiers.
According to the RBZ, ideally, a certain proportion of funds held under RTGS should be supported by funds in the Nostro accounts at a level equivalent to the import dependence ratio. Given that Zimbabwe’s import dependence ratio is around 45%, the Nostro position to support the RTGS position of $1 billion would need to be $450 million.
However according to governor Dr Mangudya, the current aggregate Nostro position of $250 million is below the acceptable ratio and as such the central bank had arranged $215 million stabilisation facilities to close the gap which had resulted in delays in the remittances of outgoing foreign payments by banks and the importation of cash.
Mangudya said banks held cash of around $120 million although $250 million had been imported since May. He also said long term TBs were currently at $1.2 billion
Further to that, the central bank was in negotiation for $330 million from regional sources to enhance production and improve liquidity in the country.
“We have arranged facilities for nostro stabilization to ensure that the money needed for importation and that is needed to do business is available,” he said adding that such facilities should be arranged by banks but because of the country’s limited access to foreign finance due to the high country risk premium, it has not been easy for the local banks to do so.
Mangudya however said the country risk could be significantly reduced if the country cleared its arrears with the international institutions.
He castigated individuals and groups bent on sabotaging the re-engagement process and debt clearance plan which the country is pursuing with international financial institutions (IFIs).
Last year, Zimbabwe, which has not received new credit lines from global lenders for close to two decades, made proposals to clear its $1.8 billion arrears to unlock fresh capital.
According to the arrears clearance plan, Zimbabwe will repay IMF arrears amounting to $120 million using Zimbabwe’s SDR resources at the fund. On the World Bank group balances repayment of IBRD arrears amounting to $896 million will be done using a term facility syndicated by the Afreximbank and Lazard Freres while repayment of the IDA and African Development Bank arrears of $260 million and $601 million will be done through a bridging facility from Afreximbank to be refinanced from a future IDA development policy operation and AfDB’s Transitional Support Facility. The plan also includes the country’s intention to approach the Paris Club after arrears clearance.
The arrears clearance plan, which the preferred creditors approved, was proposed after the country successfully completed the IMF’s Staff Monitored Program under which various targets on management of the economy and government finances were set.
But, recent media reports indicated that the arrears clearance plan was facing resistance from some individuals and groups keen on sabotaging it for political expedience.
And, an emotional Mangudya on Thursday gave credence to those reports, highlighting that sabotaging the plan would only spell doom for the country which was in dire need of fresh credit lines.
“Being the chairman of the external arrears clearance and re-engagement process, we are getting concerned that there are some people in this economy who do not want us to pay these arrears. I am not very sure why,” he said.
“Sometimes I find it a bit difficult that we are being pulled backwards, not by the IMF, World Bank and AfDB, but by Zimbabweans. If it is being smart, colleagues l beg to differ. We are here to help Zimbabwe. In the rural areas people are suffering, in the towns people are suffering. Why don’t you have a heart for the people?” he asked.
Labeling detractors of the plan unpatriotic, Mangudya said it was crucial not to let petty differences interfere with work being done to revive the Zimbabwean economy. He said Zimbabwe could access international funding, but that depended on successful implementation of reform strategies being pursued.
Zimbabwe is aiming to pay its arrears by December 31 this year.
“We are closing ourselves in a hole. Such a spirit is bad. Personally I do not have a bad spirit and never try to put such a spirit in me, I will not change. I still love Zimbabwe and we will continue to do what is right for Zimbabwe and what I think is bad for Zimbabwe I will not do.
“We need to be very careful about the clearance of arrears. We are not doing it for Mangudya or for the government. It is being done for the people of Zimbabwe,” he said.
He added; “Let us put our heads together, this economy is ours together. We all belong here, if the economy is burning we all burn together. It is suicidal not to pay the arrears, because they will continue to accumulate therefore we are not being clever by doing so.”
Mangudya said it was now time to walk the talk to restore trust and confidence in the economy.
The lack of access to new loans has also been compounded by sanctions that the United States and the European Union imposed on the country as punishment for implementing land reforms to address colonial land imbalances.