Oliver Kazunga in Victoria Falls
ZIMBABWE’S economy will not revert back to the hyperinflation environment despite the recent unjustified price increases on basic commodities and services in the market, the Reserve Bank of Zimbabwe has said.
The recent price increases induced panic in the market after some basic commodities such as cooking oil shot up by more than 100 percent, triggered by some irresponsible social media reports that Zimbabwe would face food shortages.
The country abandoned its local currency at the height of inflation in 2008 after prices of basic goods and services had risen to unprecedented levels.
Speaking during the Parliamentary Pre-Budget Seminar here on Thursday, RBZ Deputy Governor Dr Kupukile Mlambo, said:
“We are having concerns through the newspapers that prices are going up and that we are headed for another hyperinflation period. I want to allay your fears Honourable Members of Parliament that we are no way near the hyperinflation.
Using the standard methods and internationally approved methods of calculating inflation, our inflation as of September is 0.8 percent.
So generally when we look at our inflation it is still below the Sadc levels of three percent and our forecast is that by the end of the year we will still be below that range.”
Dr Mlambo said although authorities were not worried about inflation it was imperative for them to keep an eye on it. On financial stability, he said, the financial services sector was sound as indicated by a number of positives.
“For example, in the last two years, no bank has failed and we have also reduced Non-Performing Loans (NPLs) from 21 percent in September 2014 to 8,6 in October 2017,” he said.
Dr Mlambo added that banking sector deposits were on a growth trajectory to $7,6 billion as of September 2017.
A few years ago, the Central Bank set up the Zimbabwe Asset Management Company (Zamco) to mop about $800 million NPLs in commercial banks to improve the banking institutions balance sheets.
The monetary authority has highlighted that Zamco would not mop up loans that were recklessly issued by the banking institutions.