Martin Kadzere Senior Business Reporter
NET bank credit to Government increased by 87 percent in the 12 months to August this year, largely driven by Treasury Bills held by commercial and merchant banks. TB holdings by local financial institutions rose by 113 percent to $237,5 million, between August 2013 and August 2014, statistics from the Reserve Bank of Zimbabwe show. Net bank credit includes borrowings from central banks and other financial institutions that participate in Government borrowing programmes through auctions.
In the last months, Government has been floating TBs to meet various obligations; with the most recent being the issue of $30 million bills to pay tobacco farmers.
Annual growth in broad money increased further to 13,9 percent in August 2014.
Broad money supply stood at $4,32 billion in August 2014, from $3,8 billion in August 2013.
On a monthly basis, broad money registered a 2,3 percent growth.
“The annual growth in broad money was underpinned by an increase in long term savings and demand deposits of $315,1 million; $129,2 million; and $109,2 million, respectively,” said RBZ.
“These increases were, however, partially offset by a $27,6 million decline in short-term deposits.
Credit to the private sector continued to be driven by loans and advances, which were partly sustained by offshore lines of credit, as local sources of liquidity remained constrained.
Lending to the private sector by banks declined to $3,11 billion in August 2014, from $3,16 billion in August 2013.
Credit was mainly composed of loans and advances 83,7 percent; mortgages 11,9 percent; bankers’ acceptances 0,6 percent; bills discounted 1,9 percent; and other investments 1,9 percent.
The loans and advances were mainly extended to agriculture (18,7 percent), distribution (16,9 percent), and manufacturing (14,4 percent).
Individuals accounted for 16,1 percent of total loans and advances.
The private sector borrowed mainly for unclassified asset purchases (43,7 percent) as well as inventory build-up (34 percent).
Loans and advances utilised for fixed investment activity have remained low, with the procurement of plant and equipment accounting for 3,4 percent and pre and post shipment financing at 1,9 percent, of total loans and advances.