Malaba forex ruling will erode investor confidence – Experts

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By Alois Vinga

BUSINESS experts have described the recent court judgment passed by Chief Justice Luke Malaba as “unfair” and warned that it will go a long way in eroding the much-needed investor confidence.

Justice Malaba, sitting in the Supreme Court ruled that debts which were incurred in United States dollars before new regulations came into force on February 22 last year, can be discharged in local currency at the rate of 1:1.

Malaba passed the ruling sitting with Justices Nicholas Mathonsi and Susan Mavingira on Monday following an appeal filed at the Supreme Court by coal mining company Zambezi Gas Zimbabwe.

Gas Zimbabwe was challenging a judgment of the High Court granted in favour of NR Barber (Private) Limited.

The superior court said Statutory Instrument 33/19 that came into effect last year provided for US denominated debts to be converted to the local currency at 1:1 rate.

Speaking to Thursday, economist John Robertson said the ruling will result in Zimbabwe aggravating the mistrust it already has from the investor community.

“Despite the fact that complainants had approached Chief Justice Luke Malaba in pursuit of justice, the matter’s outcome resulted in injustice being served,” said Robertson.

“It appears that the main consideration that was made in passing the ruling was hinged on government’s realisation that they owe several local companies and banks a debt to the tune of US$9 billion,” he said.

The seasoned economist said even if government was going to pay up the debts, that amount (US$9 billion) had to be multiplied by 17 which is the current interbank market rate hence the move is a smart way of clearing the debt.

“In the long term, it will be very difficult for investors both locally and internationally to take up any investment opportunity like treasury bills extended by government because the ruling works entirely against business.”

Confederation of Zimbabwe Industries president, Henry Ruzvidzo said while detailed comments could not be immediately availed, the ruling obviously has far reaching implications which require wide consultation within the membership fraternity before making a final comment.

Some Zimbabweans took it twitter with Petinah Gapah saying, “There’s no doubt that the Malaba judgement means the judiciary has sanctioned expropriation. Would it be possible to bring a constitutional challenge over a judicial ruling? Not talking of an appeal but a challenge? “

Former Finance Minister, Tendai Biti described Statutory Instrument 33 and 142 of 2019 as clearly unconstitutional.

“In short, the dedollarisation process to the extent that it has wiped people’s values, savings, wages, pensions and investments is a breach of the Property Protection Provisions of the Constitution,” he said.

The court ruling is one among many shocking policy pronouncements made by government within a short space of time and in the process without adequate planning time.