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Minister Chinamasa

Business Reporters
The African Development Bank (AfDB) supports measures announced recently by the Reserve Bank of Zimbabwe (RBZ) to ease the current cash shortages and to curb capital flight, the bank’s president has said.

Zimbabwe is currently experiencing cash shortages owing to a number of reasons including depletion of bank nostro balances and the dysfunctionality of the multi-currency system because of the pre-dominant use of the USD.

The USD has virtually substituted all the other currencies including the South African Rand, the Pula and the Euro that were in use at the adoption of the multi-currency regime in 2009.

To ease the shortages, RBZ governor Dr John Mangudya announced a cocktail of measures which include a 5 percent export incentive, introduction of a foreign exchange priority list and bond notes, which will come into circulation soon.

The bond notes, a continuation of the bond coins currently in use, will be backed by a $200 million African Export and Import Bank facility.

AfDB president Dr Akinwumi Adesina said the measures would promote production and exports.

“The country needs to retain its foreign exchange resources to develop its economy and to ensure that future resources from development partners and international financial institutions are retained and used appropriately to sustain growth,” he said after meeting Finance and Economic Development Minister Patrick Chinamasa and Dr Mangudya on the margins of the bank’s annual meetings in Lusaka, Zambia.

He said the measures were also critical, especially now when Zimbabwe was on the verge of completing its re-engagement process with International Financial Institutions (IFIs).

Zimbabwe has successfully completed an IMF supervised staff monitored program, and is now forging ahead with its plan to clear arrears owed to the IFIs.

During the meeting, Minister Chinamasa updated the AfDB on the financial arrangements made by Zimbabwe to clear its arrears.

Dr Adesina stressed the importance of a timeline for concluding the process with the IFIs in order to consolidate the gains made on the reforms.

He also praised Minister Chinamasa for spearheading the re-engagement process, and reassured AfDB’s continued support to Zimbabwe, including through its private sector window, in providing energy, feeding the population, rehabilitating the infrastructure and reviving the industry.