DELTA Beverages says government must urgently clarify issues pertaining to the Reserve Bank of Zimbabwe’s (RBZ) directive to create nostro foreign currency accounts (FCAs), trim public spending to revive the ailing economy and withdraw bond notes from circulation.
By Melody Chikono
This comes after the central bank last month gave an ultimatum to create separate nostro (external bank) foreign currency accounts (FCAs) and Real-Time Gross Settlement (RTGS) FCA accounts, as part of measures to preserve value for foreign currency earners and to boost market confidence.
In its 2019 budget proposal submissions seen by businessdigest, Delta said part of the country’s problems have emanated from the use of monetary interventions to tackle fiscal spending which, in turn, arises from politically-driven policies.
Delta said the policy pronouncement has spurred sceptics to believe that a local currency has been introduced through the back door.
“It is imperative to maintain the multi-currency system and the value that is represented by RTGS balances. The foreign currency challenges should not lead to the debasing of national savings. The RTGS FCAs should remain convertible, subject to availability of hard currency. Not all bank account holders require using the funds for forex-related expenditure,” the company said.
Delta said government needed to assure Zimbabweans on the value of the current RTGS balances as the prospect of yet another erosion of personal savings is unimaginable. It said this required clarity on the convertibility of RTGS FCA balances and the need to articulate the objective of value preservation by reinforcing the messages of maintaining the multi-currency system.
“There is currently a perception of a backdoor re-dollarisation,” said Delta.
The firm went on to say that the central management of foreign currency allocations needs to be adjusted to increase transparency and accord with priorities based on the banking sector KYC (Know Your Customer) procedures.
There would be need to move to a market-based foreign currency allocation system. The brewer said the short-term measures that are critical in tackling these challenges, the hard currency shortages such as the envisaged currency reforms should avoid debasing the monetary assets held by the citizenry.
Key decisions expected from government include the adoption of an excise duty regime based on alcohol content by alternatively setting the duty on locally produced clear beer at US$0,36/l. Delta said this would approximate 35%-37% ad valorem at target retail prices of US$0,75/pint thus the need for a clear roadmap on reducing the excise rates in line with regional benchmarks.
“The other issue is that of the withdrawal of the bond notes. This could stop the black market forex trade. The notes are currently not available in both the retail and banking channels but are available aplenty for forex trades. This would support the recent RBZ directives on separation of FCAs.