HARARE (Reuters) – Zimbabwe’s freeze on financial institution lending is a short lived measure which is supposed to include inflation and stabilise its economic system, central financial institution governor John Mangudya instructed state tv on Tuesday.

President Emmerson Mnangagwa on Saturday ordered the suspension with fast impact, saying the transfer was meant to cease hypothesis in opposition to the Zimbabwean greenback, which has been quickly devalued on a thriving black market.

“We all know this can be a painful, however essential, measure. It was essential due to the rise in inflation. Some entities had been now utilizing funds from banks to buy overseas foreign money,” Mangudya instructed ZBC.

“It is a non permanent, essential measure to make sure that there’s sanity when it comes to taming inflation.”

Zimbabwe’s inflation has began to rise once more, with year-on-year inflation at 96% in April, up from 61% in the beginning of the 12 months, primarily resulting from a quickly weakening native foreign money.

Analysts from BancABC, the native unit of pan-African monetary group Atlas (NYSE:) Mara, mentioned in a analysis word that the lending freeze threatens the survival of the nation’s banks.

“The federal government is utilizing a blunt method to attempt to deal with a long-standing foreign money conundrum,” the analysts mentioned, including: “Banning lending actions will threaten survival of Banks as it will wipe out 20-50% of their incomes.”

The BancABC word mentioned that the freeze may result in shortages of products, additional worth will increase and job losses.