AT least US$71 million has so far been repatriated into the country in the past week to curb the liquidity challenges while Treasury has injected US$110 million from the Special Drawing Rights into the economy.

This comes after Treasury ordered all banks to repatriate 75 percent of funds held in offshore accounts with effect from March 1 as part of measures to curb liquidity challenges.

Appearing before the Parliamentary Portfolio Committee on Budget, Finance and Investment Promotion yesterday, Finance Minister Tendai Biti said about US$266 million was being kept out of the country.

Goromonzi North legislator Cde Paddy Zhanda (Zanu-PF) chairs the committee.The minister allayed concerns over the liquidity situation, saying the country’s banks had enough money in the accounts.

Treasury, he said, wanted about US$127 million to be repatriated, adding that the figure was likely to be met by next week.

“This shows us that you can get more out of dialogue with the market than through ‘jambanja’ and this money is going to be       used for the productive sector,” said Minister Biti.“Nostro accounts are monies that belong to the bankers, it’s not owned by individuals.”

Minister Biti said the banking sector was on a sound footing because money circulating in the sector was reflective of a ticking economy. Some of the banks, he said, had RTGS balances of around US$160 million, reflective of a US$20 billion economy.

He said it was proper for banks to have Nostro accounts for international payment purposes.Minister Biti said the main concern with some of the banks that keep money in their offshore accounts was to do with low loan-ratio deposits.

He said Treasury was concerned that some bank balances were very low and urged them to pursue mergers.

“There are 23 banks in the country but some balances are not good. It therefore makes sense that there be mergers that in stead of 23 banks we can have 10 or six strong banks,” he said.

“We have mandated the RBZ to enter into dialogue with the banks to consider this and we are not going to force anyone.” Government, the minister said, will pass a law forcing banks to merge.

He said it will be prudent for strong           banks to merge with smaller banks that have good branch networks because some of the small banks had closing balances of about US$4 800 while others had about US$32 million.

Minister Biti said some of the big banks could not give loans to the small banks because they were afraid the money will be misused.

He said Government was recapitalising the central bank as a lender of last resort to ease the situation.

Minister Biti said the RBZ will not be the panacea to capital problems because it only offered overnight accommodation.

Minister Biti said Treasury was releasing US$110 million from SDRs to boost the economy.The money will be available by next week.

He said US$40 million will go towards public infrastructure, with US$30 million earmarked for lines of credit.

The agricultural sector will get US$20 million to pay debts for grain delivered while  US$20 million will be channelled to the central bank for its lender of last resort obligations.

Minister Biti said he will not disburse the remaining US$100 million from the SDRs, saying it will be kept as a fall back for unforeseen disasters.

The committee said the central bank’s previous record of unilaterally taking money from some accounts made it difficult for the banking sector to trust it.

They said the presence of some of the personnel at the RBZ made it difficult for the banking sector to trust them.

The committee also asked Minister Biti if Treasury had been consulted in the drafting of the Monetary Policy.

He said Treasury was consulted and he holds meetings with RBZ Governor Dr Gideon Gono every Monday.

He said the two had realised that there were a lot of people who benefited from their fights and decided to mend relations.

Minister Biti said some of the amendments to the Reserve Bank Act had dealt with the activities of the central bank.He said RBZ had a debt of about US$1, 5 billion.

Last week, Minister Biti said after consultation with the Bankers Association of Zimbabwe, Government and RBZ concluded that there was need for the repatriation of all other Nostro Account balances in excess of bank’s needs, pending international payment obligations and for the purposes of taking positions in the international market.