An International Monetary Fund (IMF) technical assistance team has flagged the urgent need for Zimbabwe to adopt Basel III global liquidity standards, according to a World Bank report. Concerns are growing about the stability of local banks.
In July 2023, actuarial data revealed that most banks struggled to maintain adequate capital despite holding billions in depositor funds, with many falling short of Basel III standards.
These standards require banks to calculate economic capital through internal models, like the Z-Score, to ensure financial stability.
Basel III, developed by the Basel Committee on Banking Supervision (BCBS) in response to the 2008 financial crisis, aims to promote global financial stability.
The 2024 IMF technical assistance report highlighted Zimbabwe’s efforts to implement the Basel III liquidity framework, focusing on the net stable funding ratio (NSFR) and liquidity coverage ratio (LCR).
The report also outlined the country’s banking sector challenges, including liquidity risks and non-performing loans, and recommended strengthening risk-based supervision.
The Reserve Bank of Zimbabwe (RBZ) is working to finalize NSFR regulations and improve data transparency.
The IMF report builds on the 2019 financial sector stability review, with a hybrid technical assistance mission supporting the RBZ in implementing the Basel III liquidity framework.
This mission, conducted in early 2024, reviewed RBZ drafts, helped design a questionnaire, and provided training on the LCR and NSFR.
In December 2022, banks began implementing LCR regulations, but finalizing NSFR regulations remains a top priority for the country.
