Zimbabwe’s Central Bank orders exporters to surrender 30% foreign currency

By Alois Vinga

THE Reserve Bank of Zimbabwe (RBZ) has compelled all exporters to surrender 30% of their earned foreign currency in exchange for the ZWG at the obtaining interbank exchange rate.

Presenting the Monetary Policy Statement (MPS) premised under the theme, “Fostering Price, Currency and Exchange Rate Stability Through Balancing Confidence, Trust, Credibility, Efficiency, Stability Growth” the RBZ Governor John Mushayavanhu ordered exporters to surrender more US$.

“The foreign currency retention level for exporters has been reduced from 75% to 70%, with immediate effect. This implies that the effective surrender portion of export proceeds has been increased from 25% to 30%,” he said.

He said the initiative is aimed at guaranteeing continued stability in the interbank foreign exchange market through augmenting the supply of foreign currency, as well as building the critical foreign currency reserves needed to anchor the ZWG.

However, the initiative to raise foreign currency by taking away the hard-earned US$ from the exporters comes at a time when most companies are crying foul over due to choking shortages of foreign currency.

Indications on the ground are that the measure is likely to complicate an already tough situation.

“This review is consistent with the increased use of ZiG in the economy. The additional 5% will ensure that exporters mobilise sufficient ZiG to meet local currency obligations and other expenses, including tax payments, going forward,” said Mushayavanhu.

The central bank also moved to introduce a  US Dollar Denominated Deposit Facility (USDDDF) where the export surrender proceeds will have an option to invest the funds in a USDDDF at the RBZ which they can withdraw in ZWG on demand, at the prevailing interbank exchange rate on the settlement date.

Going forward, Authorized Dealers are expected to on-sell foreign exchange purchased from willing sellers, including the RBZ at a margin consistent with international best practices.

The limits on funds that can be accessed from the Foreign Exchange Interbank Market had been set at US$500,000 and US$100,000 for Primary and Secondary users of foreign exchange, respectively, per week. The central bank issued streamlined Foreign Exchange Interbank Market Guidelines to operationalise the refinements on the exchange rate management system and removal of foreign exchange trading limits.

“In order to promote the use of prepaid international debit and credit cards, the Reserve Bank has, with immediate effect, reviewed upwards the annual limit from US$500,000 to US$1,000,000. This review will also enhance the ease of doing business and reduce the use of foreign currency cash for cross-border transactions,” the exchequer said.

The Bank Policy Rate was maintained at 35% per annum, as assessed to be appropriate to support the current tight Monetary Policy Stance (MPS).