THE Reserve Bank of Zimbabwe (RBZ) has agreed that exporters who in the past sold their hard currency in exchange for Zimbabwe dollars, can now retain more than half of it in their local
foreign currency accounts.
This means that local exporters will no longer have to dispose of their earnings at the official rate of $824 to the US dollar.
“We are pleased that under the carrot and stick framework, exporters are responding to the initiative remarkably well, with the bulk of export proceeds now being repatriated within 30 days effectively allowing producers to retain 100% of their earnings in foreign currency accounts (FCAs) free of any surrender requirements at the government priority sector rate of $824/US$,” RBZ governor Gideon Gono said in his monetary statement on Wednesday.
“As of December 2004, 75% of export proceeds were repatriated within 30 days, effectively benefiting exporters through 100% retention of inflows in FCAs. This was up from a proportion of 26,6% of export proceeds which came in with the 30-day period in January 2004.”
He said exporters would now be able to retain 70% of their earnings in their foreign currency accounts and surrender the remainder at the auction rate, on condition that they repatriated the funds within 90 days.
In the past, exporters were forced to dispose of all their foreign currency earnings to the central bank in exchange for local currency within a 60-day period, with at least a tenth of the money sold at $824 against the greenback.
The new policy shift is in line with suggestions made by industrialists to the central bank.
Gono also told indigenous banks that they would be subjected to a new stricter auditing system that will come into effect from March.
Gono’s comments come in the wake of numerous complaints from mostly indigenous bankers that they should be subjected to a less stringent set of supervisory rules compared to the established banks.
“We thus reject the notion and misplaced expectation that the Reserve Bank should treat one class of banking institutions using a different, softer accountability scale, while treating another class with bare knuckles in defence of depositors’ security,” he said.
“This will not happen in the Zimbabwean financial sector and any current or future players in the sector by whatever description, connection or origin, will have to abide by one scale of the supervision, accountability and responsibility standards that are primed to international best practices.”
He said with effect from March 1, the central bank would also introduce “independent computer-based auditing packages to interrogate financial databases at banking institutions to validate their accuracy and validity”.
Last year at least seven local banks were placed under the management of curators, which resulted in loss of confidence in the industry.
The central bank said it was also going to disburse $10 trillion in domestic debt over the next two years as it overhauls parastatals and drives inflation down.
Gono said the country’s annual inflation rate was set to subside from three-digit levels to between 20% and 30% by the end of 2005.
By December Zimbabwe’s inflation rate was 133%, down from 620% at the start of 2004.
Since 2000, the country’s economy has shrunk by 30%.
“Our inflation is still the highest in the world and this remains a scar on our face,” Gono conceded this week.
“In 2005 we expect inflation to end at between 20% and 30%,” he said. This is a revision from the target Gono set last year for a 2005 year-end rate of between 50% and 60%.
The central bank also reviewed the gold price from the current $92 000 per kg to $130 000 with effect from February 1 this year.
Gono said that the Homelink initiative last year alone remitted US$54,8 million, dwarfing most traditional inflows.
“For the economy to operate smoothly, the country needs monthly inflows of at least US$250 million or US$3 billion annually,” he said.