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

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

“We all know this can be a painful, however crucial, measure. It was crucial due to the rise in inflation. Some entities have been now utilizing funds from banks to buy international forex,” Mangudya advised ZBC.

“It is a short-term, crucial measure to make sure that there may be sanity by way of taming inflation.”

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

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

“The federal government is utilizing a blunt strategy to try to tackle a long-standing forex conundrum,” the analysts stated, including: “Banning lending actions will threaten survival of Banks as it will wipe out 20-50% of their incomes.”

The BancABC notice stated that the freeze might result in shortages of products, additional value will increase and job losses.