Zimbabwe’s central bank lifts order suspending lending by banks

Zimbabwean five and two dollar bond banknotes, nicknamed zollars, are displayed in an arranged photo in Harare, Zimbabwe, on Friday, Dec. 29, 2017. Zimbabwean President Emmerson Mnangagwa said his new administration will woo investors and embark on an all-out business initiative to revive an economy that has halved since 2000 and provides jobs for just one in 10 Zimbabweans. Photographer: Waldo Swiegers/Bloomberg via Getty Images

The Reserve Bank of Zimbabwe (RBZ) has lifted an order temporarily suspending lending by local banks with immediate effect.

FILE PHOTO: Zimbabwean five and two dollar bond banknotes. /Getty Images

The RBZ, however, clarified that the lifting of the suspension did not apply to institutions that are currently under investigation by the Financial Intelligence Unit (FIU) for allegations of abuse of loan facilities.

Last week, President Emmerson Mnangagwa ordered an immediate freeze on bank lending, saying the move was aimed at stopping speculation against the Zimbabwean dollar which was rapidly devaluating on the black market.

RBZ governor John Mangudya also defended the action noting that it was temporary and aimed at contain inflation and stabilising Zimbabwe’s economy.

Experts had warned that the order threatened the very survival of the country’s banks and result in a ripple effect on the economy, including causing shortages of goods, additional price increases and job losses.

(Story compiled with assistance from wire reports)