The Reserve Bank of Zimbabwe (RBZ) has reintroduced foreign currency accounts (FCA) in a move expected to renew Zimbabweans’ interest in depositing hard cash in the banks, deal with the illegal foreign exchange market and stabilise prices.
The country has in the past few months been reeling under foreign currency shortages arising from the mismatch between demand and supply of the hard cash, resulting in local industries failing to sustain the needs of the local market.
The trend has also led to the rise in prices of several commodities, while hoarding of cash has also become the order of the day, with industries failing to access funds for imports while hard cash deposits in the banking sector had been subdued.
Presenting the Mid-Term Monetary Policy Statement in Harare today, Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya said while the multiple currency system will continue, Zimbabwe is reintroducing foreign currency accounts to increase hard cash deposits, stabilize prices and stamp out the parallel currency markets, with further emphasis being on a $500 million facility that is expected to address foreign exchange problems and help firms to import strategic components.
“We are introducing these policies to ensure stability in the economy and unlock production for the benefit of industry and commerce,” he said.
Dr Mangudya called on all Zimbabweans to be united in ensuring the current challenges are resolved.
“What more can we expect in this economy apart from focusing on key productive policies that can also affect the economy positively? What expect unity from everyone to achieve this huge task before us,” he said.
In a break from tradition, the Minister of Finance and Economic Development, Professor Mthuli Ncube complimented the RBZ Governor’s presentation by announcing fiscal reform measures that the government is starting to implement.
Part of the measures include a revenue collection initiative where electronic money transfers will be taxed 2 cents per every dollar, the limiting of the utilisation of the RBZ overdraft facility and streamlining the country’s state owned enterprises to improve their viability, among others.
The minister also announced the dissolution of the Zimbabwe Revenue Authority (ZIMRA) board with immediate effect.
“It is part of the fiscal reforms to instill discipline in this economy and unlock more value for the benefit of everyone,” the Minister said.
Some of the key highlights of the Monetary Policy include clearance of the external debt arrears in six months, banks aligning their systems by 15 October, banks to pay interest on foreign currency accounts, removal of 14 day window period for foreign currency accounts, introduction of statutory reserves to reduce liquidity, introduction of a treasury bill auction system with effect from November, purchase of gold by jewelers from Fidelity Printers and Refineries in foreign currency accounts, export proceeds to be remitted on time, US$500 million stabilization facility by end of October, continuation of savings bonds, settlement of capital gains tax in foreign currency accounts, and purchase of fuel in foreign currency by all international truckers.
Foreigners buying goods in Zimbabwe will now pay in foreign currency to avoid the rent seeking behaviour, among other measures.