By Golden Sibanda
Exporters are no longer compelled to sell for local currency unused export receipts after 60 days, but now have to sell 40 percent of export earnings to the Reserve Bank of Zimbabwe, up from the present 30 percent.
The measures allow exporters to hold foreign currency beyond immediate requirements, instead of battling to spend it as they get it on things they might not need. The switch in policy of buying more of the export earnings up front while allowing exporters to keep the bulk indefinitely if they wish is to ensure that the auction system remains adequately funded, while making sure exporters retain an incentive to expand business.
All purchases of foreign currency by the RBZ are done at the ruling auction rate.
RBZ governor Dr John Mangudya said in a statement yesterday that the latest key policy decisions were taken as part of resolutions adopted by the Monetary Policy Committee at its first meeting of 2021 on Thursday to refine the forex auction system.
The central bank introduced the foreign exchange auction system in June last year, resulting in improved access to forex by registered importers while ushering palpable price stability across the market and bringing previously rampaging inflation under control.
The committee meeting also passed resolutions regarding liquidation of domestic foreign exchange sales, allotment of forex on the auction, sale of forex by bureau de change, margins of trade and daily maximum limits per transaction for bureaux de change.
Dr Mangudya said the MPC was refining sustainability of the foreign exchange auction system during which the key decisions on compulsory export liquidation and surrender thresholds were taken.
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.
Mr Eddie Cross, a member of the MPC, said the 60-day period for compulsory liquidation of export proceeds had failed to result in increased inflow of forex to the auction market.
The requirement had increased the urge by exporters to use all their forex before the grace period lapsed.
He also said the forex surrender portion was raised to support the auction.
Towards the end of last year, the amount of forex resources required on the auction for key imports was falling short by 10 percent, hence the marginal increase of the surrender portion.
Dr Mangudya said that they had resolved to maintain the requirement for liquidation of all domestic foreign exchange sales at 20 percent with authorised dealers required to remit the funds to the central bank in the currency of receipt.
The MPC took the decision “to ensure that allotment of foreign currency on the auction and interbank market continues to be guided by the priority list, which places productive imports (raw materials and capital goods) ahead of . . . services, education and portfolio investments.”
Bureaux de change will now only sell less than half the amount of their daily forex balances on the auction market, the RBZ Governor said, after the MPC took the decision to reduce the threshold for such requirement from the previous 80 percent to 40 percent.
Further, the committee increased the maximum allowable margin on small transactions charged by bureaux de change from 5 to 8 percent. It also revised the daily maximum limit per transaction to US$2 000 for individuals, small and medium entities, in line with the 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.”
He reiterated that all bureau de change foreign currency transactions shall be done through the bank’s bureaux de change transaction 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. The Herald