Zimbabwe government have ordered banks to stop lending with immediate effect, the government’s decision was taken to stop speculation against the Zimbabwean dollar as part of a raft of measures to stop its rapid devaluation on the black market.
Zimbabwe reintroduced a local currency in 2019 after abandoning it in 2009 when it was hit by hyperinflation.
President Emmerson Mnangagwa accused unnamed speculators of borrowing Zimbabwe dollars at below-inflation interest rates and using the money to trade in foreign exchange.
The devaluation of the Zimbabwe dollar’s black market exchange rate has been driving up inflation.
Economists, said the move by the Zanu PF government was a desperate attempt aimed at diffusing nationwide protests call for by pressure groups.
“Suspending lending by banks and microfinance institutions will negatively affect the financial institutions and it will dent businesses that rely on borrowing for short-term financing and operational needs. In a way it is counter-productive.” Said an opposition economist.
Citizens Coalition for Change (CCC) interim vice-president Tendai Biti described Mnangagwa’s move as self-defeating and unwelcome as it could ignite a raft of litigation.