HARARE – Zimbabwe’s struggling mines will be stuck with tough foreign currency retention policies introduced by the Reserve Bank of Zimbabwe (RBZ) about three years ago.
These have been blamed for squeezing mines by giving them only a portion of their export proceeds, with the remainder coming through in bond notes at the official exchange rate.
This has been a contentious issue in the mining industry, which surrenders 55 percent of export revenues to the central bank.
Miners say such liquidity would be required to import spares and inputs to run their operations.
But the RBZ said last week, the policy would remain in force.
“The bank would therefore like to reassure all holders of free funds that their funds are very safe and secure in Zimbabwe,” the central bank chief said when he presented the February 2020 Monetary Policy Statement (MPS) on last Monday.
“The same is true for all other foreign currency accounts and that the current export retentions are being maintained at their current levels. The bank has therefore no appetite at all to temper with the legal status of the public’s foreign currency accounts,” he noted.
The central bank has been battling to spread the foreign currency it handles to social sectors like food imports following a poor agricultural season last year.
Medical requirements and sanitation projects are among the key sectors that require funding.
There has been serious lobbying across hard pressed industries for the RBZ to discontinue its retention strategy to give exporters the capacity to continue producing.
Instead the central bank, under pressure to raise foreign currency to fund vital imports, responded by applying more restriction to force firms to surrender foreign currency.
In August, the RBZ said it would start suspending documentation of exporters who would have at least US$400 000 in unrepatriated proceeds.
The move, which was meant to enforce compliance with “timely acquittal of export proceeds”, came after government had earlier accused exporting business of stashing US$900 million of their earnings in offshore banks, money which it says should be repatriated to ease the country’s dollar shortages and help stabilise the exchange rate.
“Exchange Control has noted with concern the increase in delayed and/or non-repatriation of export proceeds by some exporters,” the central bank said at the time.
“To ensure timely repatriation of export proceeds, with effect from August 15, 2019, any exporter with recoverable overdue export recipients to the tune of US$400 000 and above, shall have to access new export documentation on a prepayment basis.