Treasury creates foreign currency management system

Treasury creates foreign currency management system

February 9, 2017

GOVERNMENT has created a “managed foreign currency” system, which will see the central bank retaining 50% of the export proceeds to be distributed to companies, as it moves to resolve foreign payments delays.

BY TATIRA ZWINOIRA



Finance minister Patrick Chinamasa

This comes as the Confederation of Zimbabwe Industries is on record saying the delays in paying foreign suppliers have led to manufacturers failing to meet production deadlines, with a growing number now facing the prospect of closing.

Finance minister Patrick Chinamasa yesterday told reporters on the sidelines of the official opening of Lesaffre Zimbabwe’s new baking centre that the delays were as a result of the government taking too long in plugging the siphoning off of foreign currency from the market in 2016.

He said, as a result, a lot of forex left the market, leaving them with very little by the time they introduced this more managed system.

“All the exports are channelled through the central bank. When you export, you need to advise the central bank, fill in forms and acquittals, et cetera,” Chinamasa said.

“We moved to a managed foreign currency system. What that means is with any exporter, 50% of the foreign currency is taken over by the central bank for use by other economic players, who are into import substitution (dependent on outside raw materials) and who do not export.

“Now, 50% (the other 50%) is given to the exporter for themselves for raw materials, spares and also to the bank for their clients. So that process has already started and we think that the problem you have mentioned, a legitimate complaint, will be sorted out sooner rather than later. This is why we are looking forward to inflows from the sale of our tobacco.”

The managed system means that 50% of export revenues from the country’s exports — which include the two biggest, namely, gold and tobacco — will be retained by the central bank to be redistributed toward import dependent manufacturers’.

As such, exporters and depositors’ will look forward to the other 50%, which will be redistributed to the banks.

Currently, the central bank retains between 25% and 30% of foreign currency, while the 70% and 75% is redistributed to the banks.

Manufacturers have been struggling to make foreign payments for raw materials.

Industry and Commerce minister Mike Bimha said his ministry was engaging the Reserve Bank of Zimbabwe (RBZ) on the problems manufacturers were facing in importing raw materials.

“They [RBZ) are doing the best they can, but the point is that we can only generate forex if we export so that is where the issue stands. But at the same time, we need to facilitate the forex to them (manufacturers),” he said.

“I have been having weekly meetings with the RBZ looking at these issues and he (central bank governor John Mangudya) is very supportive.”

https://www.newsday.co.zw/2017/02/09/treasury-creates-foreign-currency-management-system/