THE Reserve Bank of Zimbabwe (RBZ) has instructed all banks placed under the management of a curator to release locked up foreign currency for corporates frozen with the financial institu
tions that are closed for business.
The latest policy shift has been caused by the central bank’s inability to raise enough foreign currency for imports, critics have said.
In a circular sent out to corporates that were affected by the compulsory six-month closure of banks the central bank said that the money is only accessible if a firm deposits the local currency equivalent at the prevailing auction rates.
“The Reserve Bank of Zimbabwe wishes to advise all corporates with foreign currency accounts frozen with financial institutions placed under the management of a curator, that they can now, with effect from 22 November 2004, make use of foreign currency funds to finance their various foreign currency commitments,” the RBZ circular said.
“This is only applicable where the corporate client has placed new deposits in Zimbabwe dollars equivalent to the same value of the auction rate. The 30-day liquidation period on all such frozen funds will be effective from the day the application for utilisation of funds is submitted to the Reserve Bank.”
Since the introduction of the auction system in January this year, the central bank has been rejecting 75-85% of the bids which has resulted in both individuals and corporates resorting to the to the black market.
Currently the auction rate is $5 658,22 against the greenback. However, on the informal market, US$1 is fetching $7 500-$8 000.
Independent economist and a member of the central bank’s advisory team, Eric Bloch, said that the decision was taken not to inconvenience firms.
“This was an administrative decision and to make sure that the funds are just not locked up and not being productive,” he said.
“The policy is not only meant for firms alone but this includes individuals as well. This is also a policy decision not to inconvenience firms that would be needing hard currency.”
Conservative figures provided for by the central bank indicate that by the third quarter (October 28) it had managed to raise US$804 million through inflows from corporates and the auction system.
Money transfer agencies/Diaspora had raised US$39,5 million, gold sales US$210,7 and tobacco sales US$49,2 million.
By the end of October the country had managed to raise US$1 249 million as foreign currency.