Maravi

‘$100m withdrawal bad for banks’

‘$100m withdrawal bad for banks’
By NANCY MWAPE

THE Bankers Association of Zambia (BAZ) has called for a meeting with the Bank of Zambia (BoZ) over Government’s decision to withdraw its US$100 million from commercial banks. Former BAZ chairperson, Sherry Thole said the move by Government to withdraw its money from commercial banks would push interest rates up, drastically. This follows Finance and National Planning Minister, Ngandu Magande statement last month that Government was borrowing its own money that was held in commercial banks.

Mrs Thole said in a letter written to BOZ, that the association proposed that the withdrawals be done in a timely and responsive manner over three months. Speaking in an interview in Lusaka, she added that if the whole process was done in a short period, there would not be enough liquidity in the market and this would push interest rates up. “The money being held by commercial banks which Government is trying to withdraw is their money. We have no quarrel about that, but this should be done systematically,” she said.

She noted that as an association, they felt the decision could cause a reversal of what had been achieved in terms of lowering interest rates adding that there was need to discuss the matter with Government. Last month, Mr Magande said that over the past years, it had failed to meet its benchmarks for net domestic borrowing. Government has since requested BOZ to cooperate and mirror the accounts of Government department.

Mr Magande also warned commercial banks that they would not have an easy ride this year, as a lot of funds that they held were Government money. Standard Chartered Bank chief head of economics for Africa, Ms Razia Khan had also warned in an analysis of African economics that plans to withdraw the US $100 million could provide strong push to for treasury bills and bonds to gain interest.

Labels: BANKING, MAGANDE

posted by MrK @ 4:55 PM