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Gono dollarises Zim economy

Godfrey Marawanyika

RESERVE Bank of Zimbabwe governor Gideon Gono took one step closer to dollarising the Zimbabwean economy when he announced that with effect from Se

ptember 1 designated service stations will sell fuel in hard currency.

This was in sharp contrast to government’s position that it will not allow any other currency to be used in Zimbabwe as legal tender in ordinary business transactions. A number of businesses have in the past been prosecuted for selling their goods and services in foreign currency.

“Over the past few months, the Reserve Bank has been conducting feasibility studies on the possibility of allowing some designated fuel filling stations to sell their petrol and diesel in foreign currency,” Gono said.

“With effect from September 1, the motoring public can access fuel at designated service stations, which will be announced in due course by the Ministry of Energy and Power Development through payment in foreign exchange, at the initial price of US$1 per litre,” he said.

Banking sources said the move to charge for fuel in foreign currency should entail amending aspects of the Exchange Control Regulations which make it illegal to charge for local goods and service in foreign currency.

Gono also offered an amnesty for all those with money outside the country to repatriate it into the country without fear of prosecution.

“In order to allow for the free inflows of free funds which, for one reason or another, found their way into offshore markets, the Reserve Bank is pleased to announce that the programme of Import Tracking Control Numbers has been suspended with immediate effect,” he said.

“Holders of free funds offshore are therefore with immediate effect, free to bring in imports, particularly those of a productive nature, on a no questions asked basis.”

Gono also announced that with immediate effect, embassies, international organisations, non-governmental organisations, diasporans and sellers of free funds would get $17 500 for every US dollar.

He said since the first half of 2005, foreign exchange inflows to the central bank amounted to a cumulative total of US$630,3 million compared with US$771,5 million during the same period last year.

He said during the first six months of the year, the country realised US$877 million compared to US$822 million during the same period last year.

He said the export sector had realised a total of US$743,9 million as compared to US$578 million in 2004.

Commenting on Zimbabwe’s status with the International Monetary Fund, he said over the past 18 months Zimbabwe had escalated its repayments.

He said Harare was making US$9 million payments every quarter.

Gono also pledged to escalate the payment proceeds, but did not make any reference to the IMF board meeting which will decide Zimbabwe’s membership next month.

He however conceded it would be difficult to contain inflation between now and the third quarter.

Currently month-on-month inflation is 164%.

He said more efforts would be made to contain liquidity expansion.

The market has been experiencing daily shortages of an average $352,9 billion, peaking at $662,4 billion in March.

He said with effect from September next year, the RBZ would introduce new capital adequacy ratios for banks of $100 billion from the current $10 billion.

Merchant banks, finance houses and building societies will pay $75 billion, from $7,5 billion.

Discount houses will fork out $50 billion from $5 billion, while asset management firms will pay $10 billion from the current half a billion.

Gold support was also increased from $175 000 per gramme to $230 000, while the tobacco support price was also moved to the new diaspora rate.

He said with immediate effect the 5% borrowing facility had been set aside, with exporters’ concerns now being addressed through the exchange rate.

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