FILE - In this Tuesday Oct. 1, 2019 file photo Zimbabwean President Emmerson Mnangagwa delivers his State of the nation address at the opening session of parliament in Harare. (AP Photo/Tsvangirayi Mukwazhi, file)
INTERNATIONAL - Zimbabwe’s economy is set to contract by 6.5% this year after a drought and power shortages, the finance minister said on Thursday, adding that power generation could be cut at the largest hydro plant due to low water levels.

Mthuli Ncube told lawmakers in the resort town of Victoria Falls that Zimbabwe would spend more than $300 million to import 840,000 tonnes of maize, a staple crop, after the drought left more than half the population in need of food aid.

The Reserve Bank of Zimbabwe (RBZ) also said half of the total $19 billion in reserve balances held across the country’s banking sector was being held by only 50 companies operating in the country and that this was posing a high risk of manipulation and pushing up exchange rates on the parallel market.

The central bank said it was important for authorities to monitor the flow of money from the companies' accounts to avoid associated risks, New Zimbabwe reported.

Due to these companies holding 50 percent of the total $19 billion in bank deposits, there was little remaining for the rest of the Zimbabwe population to bank in their accounts.

However, the Zimbabwean authorities have been strongly criticised for allowing companies and individuals linked to the ruling Zanu-PF administration to engage in illegal foreign currency dealings with no consequences.

Last month, RBZ's Financial Intelligence Unit closed in on accounts held by Sakunda Holdings and its subsidiary firms amid concerns they were heavily involved in illegal foreign currency dealings.

African News Agency (ANA) / REUTERS