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Zimbabwe's bank lending freeze will worsen economic crisis — business chamber

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Zimbabwe's decision to suspend bank lending in a desperate bid to arrest the rapid devaluation of its currency will worsen the economic crisis and expose borrowers to predatory loans, the country's business chamber said.

“Surely, this is not an ideal measure to control the growth in broad money supply,” the Zimbabwe National Chamber of Commerce said in a statement.

President Emmerson Mnangagwa ordered banks to stop lending with immediate effect on Saturday, saying the unprecedented move was meant to stop speculation against the Zimbabwean dollar, which has been rapidly devalued on a thriving black market. On Monday, the official rate moved to 275.79 Zimbabwe dollars, according to the central bank website, after the government decided to use interbank market rates instead of a rate determined during the central bank's weekly auctions.

An official of the Bankers Association of Zimbabwe told Reuters it would comment on the order to suspend lending only after a meeting with the central bank on Monday.

 

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