HomePoliticsBanks ordered to retain 50% forex from individuals

Banks ordered to retain 50% forex from individuals

Blessing Zulu

THE governmenthas instructed ba-nks to retain 50% of foreign currency from individual foreign currency accounts, the Zimbabwe Independent has established.

This follows recent moves by government proposing to target individual account holders although this was never enforced. Now banks have been ordered to account for every cent that they have in foreign currency.

Government last week formed a special taskforce to address the management of foreign currency which it said was being abused. The taskforce has directed the Reserve Bank of Zimbabwe to scrutinise all individual foreign currency transactions.

“Individuals who receive foreign currency from foreign sources have been classified as exporting services,” said a bank chief economist.

The new arrangement means that when an individual wants to withdraw foreign currency from a personal account, he has to exchange half of it using the official rate of $824 to the US dollar. The bank will then remit the other 50% of hard currency to the RBZ.

The move resulted in individuals rushing to liquidate their foreign currency holdings last week.

Analysts said the move would force people to deposit their foreign currency outside the country.

“Botswana and South Africa are set to benefit from this circus,” said a chief economist with a local bank. “People will opt for offshore accounts in these countries and Zimbabwe will lose the little foreign currency that was trickling in.”

Finance minister Herbert Murerwa said people working abroad would be encouraged to assist.

“Further, government is holding discussions with interested parties for purposes of mobilising foreign currency from Zimbabweans in the diaspora,” Murerwa said at a National Economic Revival Programme meeting earlier this year.

“Indications are that a minimum of US$1 million can be collected on a weekly basis,” Murerwa said.

It is believed that there are up to three million Zimbabweans in South Africa, 176 400 in the UK, 33 075 in the US and 165 375 in Botswana.

The shift from exporting companies to individual foreign currency account holders demonstrates government’s desperation to raise hard currency.

The foreign currency crisis has been exacerbated by the collapse of the agricultural sector. The chaos on the farms has seen tobacco production, the main forex earner, taking a nosedive. The tourism sector has also been hit by the collapse of the rule of law and the government’s human rights record.

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