Zimbabwe: IMF directed ZIMBABWEAN CENTRAL BANK to wrap up operations of stressed banks to save financial sector.
The International Monetary Fund (IMF) has given its recommendation to the Zimbabwean Central bank to shut operations of the beleaguered private sector banks in the country so that the financial segment of Zimbabwe can be saved from a near collapse.
In its most recent report on Zimbabwe, the Fund stated, To address deteriorating asset quality and restore confidence, serious consideration should be given to closing troubled banks (if non-systemic), or at least ring-fencing them, for example, by restricting their ability to take new deposits from the public.
Nearly all of the Zimbabwean banks are facing challenges as a result of insufficient capital and mounting size of non-performing loans.
Moreover, the national economy is still to emerge from its weak position and the country is struggling from an unsustainable external debt and huge de-industrialisation and informalisation.
Though Zimbabwe's average growth rate of Gross Domestic Product (GDP) during the economic revival of 2009-12 reached the levels of 7.5%, the figure is slowing down gradually. The sluggish growth of Zimbabwean economy is attributable to liquidity problems, such as the absence of access to affordable capital and revenue under-performance, plus obsolete technologies, structural blockages comprising power scarcities and dearth of adequate infrastructure, as well as fraudulence and an explosive and weak financial atmosphere across the world.