The Sunday News
Judith Phiri, Business Reporter
THE Reserve Bank of Zimbabwe (RBZ) has made a raft of reforms to enhance and stabilise the foreign exchange market, including immediately scrapping the much-loathed compulsory requirement to liquidate unutilised export proceeds within 60 days.
In a statement last week, outlining the January 7 Monetary Policy Committee (MPC) meeting, Reserve Bank of Zimbabwe (RBZ) governor Dr John Mangudya said the measures were meant to refine and enhance the sustainability of the foreign exchange auction system.
In respect of surrender and liquidation of foreign exchange receipts, Dr Mangudya said the MPC resolved to remove the compulsory requirement to liquidate all unutilised export proceeds after 60 days, with immediate effect.
Prior to the decisions, all export earnings not used after 60 days, except with special dispensation, were subject to compulsory liquidation at the going market rate while the mandatory surrender portion for export earnings stood at 30 percent.
Dr Mangudya said some of the resolutions were to: “To increase the Export Surrender Requirement from 30 percent to 40 percent on all export receipts, with immediate effect. To maintain the liquidation requirement for domestic foreign exchange sales at 20 percent net of sales tax, with authorised dealers required to remit funds to the Bank in the currency of receipt.”
The committee meeting also passed a resolution such as ensuring that the allotment of foreign currency on the foreign exchange auction and interbank market continue to be guided by the priority list which places productive imports (raw materials, consumables and capital goods) ahead of foreign exchange requirements for services, education and portfolio investment.
Dr Mangudya said they had resolved to enhance the role of bureaux de change in the foreign exchange market by reducing the portion of balances to be sold on the foreign exchange auction bureaux de change from 80 percent to 40 percent in line with the export surrender requirement for exporters.
The MPC also resolve to increase the maximum allowable margin on small transactions to be charged by bureaux de change from five percent to eight percent.
The MPC took the decision “to revise the daily maximum limit per transaction to US$2 000 at bureaux de change level to cater for foreign exchange requirements for individuals, micro and small to medium enterprises, in accordance with the foreign line priority list.”
Dr Mangudya said the MPC also agreed “to affirm that bureaux de change are allowed to purchase foreign currency from individuals and companies without limit subject to Know Your Customer (KYC) principles and anti-money laundering requirements.”
It was also resolved to reiterate that all bureaux de change foreign exchange transactions shall be done through the Bank’s bureaux de change transaction reporting system.
The central bank chief said the bank will continue to review and refine measures to enhance the sustainability of the foreign exchange system, which has been critical in anchoring management of foreign currency and price stability in Zimbabwe.
Economic analyst and chief executive of Oxlink Capital, Mr Brains Muchemwa said the increase in the export surrender requirement, at a time the spread between the official and parallel rates has widened by over 30 percent will impose a punitive tax on exporters and become a disincentive for incremental exports.
He also noted that it becomes imperative that the interbank rate be managed proactively in line with changes in the monetary aggregates in order to eliminate glaringly profitable arbitrage opportunities between the official and the illegal parallel exchange rate.