Source: EDITORIAL COMMENT: RBZ should act | The Financial Gazette March 23, 2017
LAST week, we reported that international airlines flying into the country had nearly US$30 million from air ticket sales locked in the country because banks could not raise foreign currency to allow them to remit the money back to their countries.
The reason is that since last year, the central bank put in place a foreign currency allocation system under which certain sectors of the economy are prioritised in terms of foreign payments or obligations.
Airlines were among several companies or economic sectors on the priority list. In fact, as reported by this newspaper last year, Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya, promised airline operators that he would ensure that they are not affected by the new payments regime.
The new regime emerged principally because the RBZ has been creating money through its real time gross settlement (RTGS) system. On behalf of central government and on its own behalf, the RBZ has been taking up to 80 percent of all foreign currency earnings and allowing banks to retain at least 20 percent.
The foreign currency earners have been paid using a virtual currency generated via the RTGS platform, which is controlled by the central bank. So while essentially every bank account holder believes that they have US dollar accounts, these are essentially phoney US dollars because they have been created by the RBZ. Their only form of support is the recently introduced bond notes.
Which is why even if the airlines and other account holders have US dollar accounts with local banks, they cannot use the money elsewhere apart from Zimbabwe. They have to depend on the central bank to allocate them something from the 80 percent it takes from export proceeds, or the 20 percent that banks retain.
This has not been happening. Mining companies, the biggest single foreign currency earning sector in the country, is currently failing to pay its suppliers of spares and other accessories because of this reason. Many miners have outstanding payments to suppliers running into three months or so.
Airlines help us bring tourists from various countries. This allows us to earn foreign currency from these tourists. If the airlines pullout of the Zimbabwe route, this will have terrible consequences on the economy.
The airlines that have been affected by this problem are Ethiopian Airlines, South African Airways, Kenya Airways, British Airways’ ComAir, Emirates, Taag Angolan, Namibian Airways and Malawian Airways.
They operate flights into Harare, Victoria Falls and Bulawayo.
Another foreign airline that had expressed the desire to fly into Zimbabwe and bolster our tourism industry in the process is Turkish Airlines, which wants to operate flights into the resort town of Victoria Falls.
Something needs to be done urgently to rescue the country from an imminent crisis. We may be killing the goose that lays the golden egg.
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