Parliament must amend the Reserve Bank of Zimbabwe (RBZ) Act to limit government’s overdrafts from the central bank, as they stoke inflation and promote fiscal indiscipline, the Zimbabwe National Chamber of Commerce has said.
The RBZ Act (Chapter 22:15) Section 11 (1) allows the central bank to extend temporary advances to central government through an overdraft facility.
But the ZNCC – a membership-based organization representing the private sector – argues the 20 percent is way too high, creating fiscal deficits, among other repercussions.
“Parliament should consider amending the RBZ Act to reduce the statutory ceiling on central government overdrafts from 20 percent to five percent of the previous year’s government revenues,” ZNCC said in its latest March 2026 newsletter.
“A ceiling of 20 percent is considered high and may create scope for excessive monetary financing of fiscal deficits,” the organization said.
It added: “Large central bank advances to government can weaken fiscal discipline and increase the risk of quasi-fiscal operations.”
“In past periods, reliance on central bank financing contributed to monetary expansion, inflationary pressures, and instability in the financial system,” ZNCC said. – TML