BoZ reduces statutory reserve ratios
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By Derrick Sinjela published on Monday 11th July 2011
Bank of Zambia Governor Dr. Michael Gondwe
Secretary to the Treasury Fredson Yamba with Finance Minister Alexander Bwalya Chikwanda and BoZ Governor Michael Gondwe
THE Bank of Zambia says the statutory reserves ration on both kwacha and foreign currency deposits have been reduced by 3 percentage points from 8% to 5%.
With this reduction, BOZ estimates that a total K700 billion will be released, and that this liquidity will no available for non-lending to the various sectors of the Zambian economy.
According to a BoZ Press Statement made available last week indicated that the cost of holding this liquidity as unremunerated deposits of the Bank of Zambia had substantially reduced, as reflected in lower lending rates.
The BoZ Statement took note of the widespread concerns expressed about the high levels of base lending rates in the commercial banks and the consequent adverse effects on the affordability of growth-enhancing credit by a number of productive sectors.
BoZ announced that in its aim at streamlining the cost of funding for commercial banks with the view of making it possible for them to effect meaningful reductions to their base lending rates, it will reduce the core liquid asset ratio and reduce the overnight lending Facility (OLF) margin.
“The core liquid assets ratio has been reduced by 3 percentage points from 9% to 6% and the OLF margin applied on the facility have been reduced from 4 percentage points to 2 percentage points above the interbank rate. The BOZ further wishes to announce that these measures will take effect immediately,” BOZ announced.
