MPC keeps interest rates unchanged

CLOUDINE MATOLA

The Monetary Policy Committee (MPC) on Monday  resolved to keep  interest rates unchanged  at 130%  as a result of the prevailing macroeconomic environment, Business Times can report.

The resolution was made at an MPC meeting that was held on December 1, 2023, according to Reserve Bank of Zimbabwe governor John Mangudya.

 

“Considering  the prevailing  macroeconomic environment, the MPC resolved  to maintain the current bank policy rate at 130% and the medium -term  bank  accommodation facility interest rate for the productive sectors, including  individuals and  MSMEs at 75%, which rates  will be reviewed in line with inflation developments from time to times,” Mangudya said.

Mangudya added that the MPC determined that, considering the importance of diaspora remittances to the national economy, the government ought to expand the fiscal and non-fiscal incentives for Foreign Direct Investment (FDI) to include investments made by diaspora members of the nation.

The MPC also highlighted the robust foreign exchange generation capacity, demonstrated by the 2.3% rise in foreign exchange inflows to US$9.44bn as of October 31, 2023, from US$9.23bn reported in the same period in  the previous year.

“The MPC noted also noted the strong foreign currency generation capacity of the country as evidenced by a 2.3% increase in foreign currency inflows to US$9.44bn as at 31 October 2023, compared to US$9.23 generated during the same period in 2022,” he said.

According to Mangudya, since 2009, diaspora remittance flows have continuously outpaced foreign direct investment (FDI), portfolio investment, and official development assistance in terms of foreign currency inflows.

As of October 2023, these remittances from the diaspora accounted for 16% of the nation’s foreign exchange inflows.

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