Zimbabwe’s central bank said on Wednesday it was suspending its key banking rate with immediate effect and adopting a dual interest rate system in a bid to help shore up the country’s struggling economy.
Under the new system exporters and companies in the ”productive” sector would be able to borrow money at low interest rates, while importers and local consumers paid market-determined interest rates, the bank said in a statement.
The previous bank rate was 57,2% in the past year.
”This measure has become necessary so as to achieve the twin objectives of stimulating economic growth while at the same time bringing inflation under control,” the Reserve Bank said in a statement.
Inflation has soared by more than 100% since last November, climbing by a record annual rate of 140% in September. Nearly half of the country’s population of 14-million face critical food shortages and the government has predicted the economy will contract by nearly 12% in 2002.
Reserve Bank Governor Leonard Tsumba told reporters a revolving fund would be set up which would allow exporters to borrow money at an interest rate of five percent, and ”productive” companies at 15%.
There were no details on the likely rate for importers.
A chronic shortage of foreign currency has forced the Zimbabwe dollar to depreciate dramatically to about 1 500 to the greenback on an unofficial market in the past two years, compared with its official rate of 55 to the dollar. – Reuters