RBZ clarifies new forex surrender policy

THE Reserve Bank of Zimbabwe (RBZ) is set to meet with the Bankers Association of Zimbabwe (BAZ) and Accountant General with a view to map the way forward on the use of foreign exchange from the 25 percent surrender portion of export proceeds.

Reserve Bank of Zimbabwe (RBZ)

RBZ governor, Dr John Mangudya, has said the Government will provide the local currency required to purchase foreign exchange from part of the 25 percent surrender portion of export proceeds for the purposes of servicing the external loans assumed by the State.

This follows the recent announcement by Finance and Economic Development Minister Professor Mthuli Ncube who stated that banks will no longer withhold foreign currency surrendered by exporters.

Professor Mthuli Ncube

Instead, the Treasury will fund the 25 percent local currency component surrendered by exporters.

“Treasury will now fund the Zimbabwe dollar component of the 25 percent foreign currency surrendered by exporters, in order to eliminate the creation of additional money supply,” said Prof Ncube.

“The foreign currency collected from the 25 percent that is surrendered, will now be collected by the Treasury and used in servicing the foreign currency loans assumed from the Reserve Bank of Zimbabwe.

“Banks will no longer withhold any foreign currency surrendered by exporters, and all liabilities to the banks will be settled through Treasury,” he said.

In an update yesterday on the operational modalities for the management of the surrender portion of exports proceeds, Dr John Mangudya said further to the announcement by Prof Ncube on the use of foreign exchange from the 25 percent surrender portion of export proceeds, management of foreign exchange from export receipts will continue to go through the normal banking channels with the bank playing the pivotal statutory role of intermediation between banks and the exchequer.

“In that regard, the minister’s press statement is not intended to change the statutory requirements or merge fiscal and monetary policy jurisdictions. 

“The essence of the new measures is that Government is now actualising the provisions of the Finance Act No. 7 of 2021, which, inter alia, provide for the take-over of external loans on the bank’s books.

“Government will provide the local currency required to purchase foreign exchange from part of the surrender portion of export proceeds for the purposes of servicing the external loans assumed by the State,” said Dr Mangudya.

He added that the Government will alternatively use its own foreign exchange resources to settle the said assumed foreign loans.

“The bank shall, therefore, ensure that all foreign currency arrangements, entered into by and between both local and foreign financial institutions and the Republic of Zimbabwe, are fully respected and loan obligations are serviced in accordance with the covenants of the respective underlying facilities or commitments.

“This will ensure financial system stability and that there are no disruptions in the financial markets. 

“The Bank shall meet the Bankers Association of Zimbabwe and the Accountant General to agree on ways to ensure that the modalities envisaged in the policy measures are seamless, flawless, and in line with best practice.”

Over the last fortnight there has been a sustained attempt to collapse macro-economic stability, a key component for economic development, just as the country is stepping up towards the holding of the harmonised elections on 23 August showing that the country’s detractors are not relenting.

 The Treasury has taken radical steps to stop these efforts.

Chronicle

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