BoZ Establishes K10 BN Refinancing Facility
The Bank of Zambia (BoZ) has announced a series of measures in response to the deteriorating macroeconomic environment and the coronavrius, including the establishment of a Targeted Medium-Term Refinancing Facility with an initial amount of K10 billion to provide medium term liquidity.
In a press statement the Bank writes, “The Zambian economy has been facing significant macroeconomic challenges as reflected in low growth, high fiscal deficits, rising inflation and debt service obligations as well as low international reserves. The outbreak of COVID-19 pandemic has compounded the situation, resulting in unprecedented global public health and economic crises. Although the full impact of the COVID-19 shock on public health and the economy cannot be determined at the moment, indications are that it will be unprecedented.”
Other measures announced by the Bank include:
Scaled up open market operations to provide short-term liquidity support to commercial banks on more flexible terms than those obtaining before the outbreak of COVID-19;
Revised rules governing the operations of the interbank foreign exchange market to support its smooth functioning, strengthen market discipline and provide a mechanism for addressing heightened volatility in the exchange rate in periods of stress;
Revised loan classifications and provisioning rules through the issuance of new Directives as the replacement to Statutory Instrument No. 142 of 1996, which is in the process of being revoked;
Extended the transitional arrangement provided for under CB Circular No, 11/2017;
Allowed eligible non-bank financial institutions to henceforth partially use capital instruments that would not ordinarily qualify as common equity Tier 1 and Tier 2 capital, for purposes of computing regulatory capital;
Stepped up sensitization and and is encouraging the use of digital channels and contactless mobile payment mechanisms aimed at preventing the spread of the disease by minimizing person-to-person contact, decongesting banks and other financial institutions premises and reduced use of cash;
Implemented Business Continuity protocols that will ensure that systemically important payment systems and financial market infrastructures remain available.
The Bank is still recommending people to stay safe by going cashless where possible.
