RBZ lifts restrictions on foreign currency transfers

• Biti: failure is the only option

• Gono: 'devaluation will bless parallel market'

• RBZ cuts money supply to stem inflation

• Interest rates unchanged at 500%

• RBZ refuses to devalue currency

• Zim inflation hits new record

By Lebo Nkatazo

ZIMBABWE'S central bank has lifted restrictions on foreign currency transfers to Zimbabwe in a bid to boost free funds inflows, it was announced Wednesday.

Gideon Gono, the Reserve Bank governor, announced the new policy shift in an eagerly-awaited monetary policy statement on Wednesday.

Gono said: "In order to promote the free flow of foreign exchange in the economy, with immediate effect, recipients of transfers from the Diaspora can be paid their free funds in foreign exchange without limitations.

"This way, stakeholders with relatives abroad, who to this point were shunning the safe, legal Authorised Dealers and Money Transfer avenues of receiving funds can now transact through the formal system."

There are currently seven authorised Money Transfer Agencies -- NMB Bank, Stanbic Bank, Fredex Financial Services, CFX, Barnfords and Pacific.

The RBZ controversially withdrew licences from all 16 MTAs that were operating in September last year after claims that they were flouting the country's foreign currency regulations.

Following the closure of the agencies, the interbank foreign exchange market posted a 17.7% decline in hard currency sales from September to October, when they totaled US$13.5 million, and a 10.5% fall in foreign exchange purchases to US$15.3 million.

The RBZ was forced to reinstate seven of the 16 MTAs' licences. The licences are renewable every year and the RBZ said it would closely monitor compliance.

Zimbabwe has been struggling to raise enough foreign currency after a dip in exports. Several key industries have been forced to shut down or downscale operations.

Dr Alex Magaisa, a financial services lawyer said the move by the RBZ was long overdue, urging Gono to go further and explore the possibility of adopting the United States dollar as official currency for a period.

He said: "This is simply an admission, long overdue I must add, that you cannot compete with the parallel market, when clearly, it offers better rates than those available on the formal market.

"However, it would be insufficient to leave it at that, i.e. to have the foreign currency being exchanged in this way while the Zimbabwe dollar remains the official currency in the country, simply because it will fuel the parallel market even further.

"As such, perhaps the only way to counter this, is to do the full Monty, and accept that the new currency is the US dollar, i.e. to stem the rise of the parallel market and bring some measure of stability, Zimbabwe probably has to swallow the bitter pill and dollarise the economy.

"This, of course, will be a hard decision to extract from the Executive, sensitive as they are, about the much vaunted ideas of sovereignty and independence.

"I like the fact that Gono appears to have conceded what we have been saying all along - that the solution is not in his hands, but is largely in the political sphere."

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