THE Zimbabwe National Chamber of Commerce (ZNCC) has bemoaned policy inconsistency, saying lack of clarity on the country’s monetary system may affect mortgage financing in future.
Zimbabwe is currently using the multi-currency system which is largely dominated by the United States dollar and the local currency.
But limited control on the monetary policy and increasing demand for the greenback are now pushing monetary and fiscal authorities to consider shifting back to the sole use of the local currency.
After announcing the multi-currency system a few years back against the backdrop of rising inflation and the depreciation of the Zimbabwe dollar, banks began cautiously extending mortgage finance in hard currency in an effort to hedge against inflation.
According to pre-budget submissions made by the ZNCC, the government should be consistent on its policy.
Finance minister Mthuli Ncube is next month expected to present his budget statement before Parliament.
“There is a need for clarity in terms of the multi-currency regime. The Government of Zimbabwe, through the Ministry of Finance, Economic Development and Investment Promotion, announced last year that the multicurrency regime will be in force for the duration of the National Development Strategy 1 (NDS 1),” the ZNCC says.
“This has created problems for the financial sector. Banks are unwilling to extend credit towards long-term projects or capital expenditure projects, especially in foreign currency given the hazy outlook post 2025 — in the process threatening the forecast GDP numbers due to credit collapse in the economy.
“The policy position on currency has weakened the mortgages market. The majority of the financial institutions can no longer afford to enter mortgage arrangements given that most of these average five years in the Zimbabwean market.”
Experts have in the past criticised judgments by the Zimbabwean courts which have been viewed as harsh on lenders, especially in view of the abrupt changes on the monetary policy landscape.