Govt policy measures anchoring stability: POSB

POSB says it is in support of the measures implemented by both monetary authorities and Treasury to maintain economic stability. (File Picture)

THE People’s Own Savings Bank (POSB) has commended policy measures rolled out by the Government saying the interventions will go a long way towards stabilising the local currency.

The measures included the liberalisation of foreign exchange trading, transfer of external payment obligations from the Reserve Bank to the Treasury and increase of the central bank policy rate from 140 to 150 percent.

The transfer of debt service obligations was meant to close the flow of excess liquidity into the market, through payments made by the central bank to exporters while hiking the bank policy rate would stymie speculative borrowing.

Further, the Government also directed that all import duties be paid in local currency (except for luxury goods), that 50 percent of corporate tax payable in forex be settled in Zimbabwe dollars, and that all public institutions collect fees and charges in local currency; all of which were meant to promote the use of the domestic currency.

The measures were meant to restore stability in the economy following massive inflation increase due to currency depreciation; especially on the parallel market.

In the second quarter of 2023, the parallel market exchange rate plummeted to over $8 500/ US$1, while the weighted average official exchange rate reached its weakest of $6 926 to the greenback

Following the interventions by monetary authorities and Treasury, the local currency briefly saw rapid depreciation, but it has since firmed to $4 505/US$1 as of 25 July 2023. The measures have also seen the local currency firming up on the parallel market exchange rate.

POSB chief executive officer Garainashe Changunda told the bank’s annual general meeting that an unstable economic environment presented a problem in terms of pricing, leading to procurement challenges.

“The monetary authorities are expected to maintain the hawkish monetary policy stance to support the currency and contain inflation. We are in support of these efforts and expect the stance to stabilize the value of the Zimbabwe dollar against the USD,” said Mr Changunda.

He was also optimistic that the country would attain its 2023 economic projections on the back of an improved 2022/2023 agricultural output and improved electricity generation efforts.

According to analysts’ the introduction of a functional interbank market has enabled banks to match the foreign currency demand and supply through the formal banking system.

In terms of performance, POSB recorded a net profit of $2,34 billion in inflation-adjusted terms during the 2022 financial year to December.

Net operating income for the year to December 2022 grew 74 percent in inflation-adjusted terms to $19 billion credited mainly to growth in transaction volumes and values.

Operating expenses surged 93 percent to $14, 60 billion in inflation-adjusted terms from $7,56 billion recorded for the year 2021 driven mainly by the general rise in prices due to inflationary pressures.

“The bank attained an overall performance rating of 4.14 out of 6 in the 2022 financial year,” Mr Changunda said.

For the six months to June 2023, POSB posted a net profit of $63,69 billion against a budgeted profit of $3,19 billion.

It also witnessed an improvement in net operating income due to growth in transaction volumes despite the significant increase in the exchange rate to $6,326.59 against US$1 in June 2023, from $671.5 to US$1 in December 2022.

However, according to POSB acting chief finance officer Maria Gunde operating expenses were above budget by 53 percent despite implementation of cost containment measures.

“The increase was mainly attributed to a general rise in prices brought about by inflationary pressures,” said Mrs Gunde.

POSB however remains well capitalised with a capital adequacy ratio of 62 percent and 46 percent as of 31 December 2022 and 30 June 2023 respectively.


Leave a Reply

Your email address will not be published. Required fields are marked *


Police hunt down illegal money changers

Precious Manomano Herald Reporter ILLEGAL money changers will be arrested and prosecuted if they continue to undermine the newly introduced ZiG currency, police said yesterday. Last week, Reserve Bank of Zimbabwe Governor Dr John Mushayavanhu introduced the new currency, which is backed by the country’s gold and foreign currency reserves. Already almost all banking systems […]

Read More

Sugar price remains the same – Zimbabwe Sugar Association

Michelle Moyo, THE Zimbabwe Sugar Association (ZSA) advises all stakeholders and the general public that the recommended unit shelf price of table sugar remains unchanged at US$2.60 for wholesale and US$2.76 for retail of SunSweet, with Gold Star white sugar retailing at US$2.80 per 2 kgs. In a statement, Chairman of ZSA Mr Willard Zireva […]

Read More

Binga transformation shines light on independence gains

Nqobile Tshili, BINGA District will this year play host to Matabeleland North Provincial Independence Day celebrations  and the event is expected to showcase the massive transformation of the Tonga speaking community once regarded as marginalised while at the same time buttressing Government’s policy of rotating national events countrywide. Under the Second Republic development has been scaled […]

Read More