Source: New forex rules in the pipeline | The Herald May 23, 2019
Zvamaida Murwira Senior Reporter
Zimbabwe has enough foreign currency for businesses to meet their foreign payments if the interbank starts operating efficiently, Secretary for Finance and Economic Development Mr George Guvamatanga has said.
He said Zimbabwe was generating over US$1,2 billion per year in export proceeds, which should be enough to oil the operations companies if taken to the interbank market.
Mr Guvamatanga said this on Tuesday night during a ZBCTV programme, Face The Nation.
“Once we get the interbank operate efficiently, there is enough foreign currency for everyone. The only problem is that at the moment it (forex) has been inefficiently allocated,” said Mr Guvamatanga.
“As long as it is efficiently allocated, we have more than enough foreign currency. If you look at our total export receipts and compare them to our nearby countries and other countries in Africa which I will not mention, we actually have twice or three times the export proceeds compared to them and they do not have the same challenge we are facing.”
Mr Guvamatanga said citizens’ insatiable appetite for imports was draining forex.
It has also been observed that exporters and some individuals are holding onto their money in nostro and offshore accounts without liquidating it for unclear reasons.
Mr Guvamatanga said as of Friday last week, the country had US$800 million in nostro FCAs while US$700 million was due to be received in export receipts, making the country liquid.
“The challenge has been around having those funds available on the interbank market, which are the issues addressed by the Governor (of the Reserve Bank of Zimbabwe, Dr John Mangudya) yesterday (on Monday) and we now expect that the Governor will be able to complement.
“It is not the responsibility of the Government or the Reserve Bank of Zimbabwe to provide the market with foreign currency; it is industry, the miners, tobacco merchants. Those are the ones who have got access to foreign currency and are the ones that should bring foreign currency into the country,” said Mr Guvamatanga.
He said there was “absolutely nothing” structurally wrong with the economy, with an analysis he did showing that over the past 10 years, US$1,2 billion was generated per year.
However, the receipts have not been brought in and exporters have been sitting on the money in their FCAs outside the country, said Mr Guvamatanga.
Exporters are allowed by law to hold on to forex for 90 days.
“But if all that money had come through as we had expected, then at least US$1 billion would have come onto the market.
“If that billion had come in, we would have been able to pay for fuel, electricity, (and) cooking oil. But for one reason or the other, that money has not come in. That is why we have not been able to pay as we would have ordinarily been able to do under normal circumstances.”
Mr Guvamatanga criticised businesses that were pegging their on the parallel market forex rate, saying there was no justification for that.
Mr Guvamatanga said while the parallel market was unavoidable, even in advanced economies, it did not determine what happens on the official market as is the case in Zimbabwe where the black market determines the direction of a $70 billion economy.
“That is what we are addressing now. There is no normal market that moves in a few hours, from 4 to 8 and at the weekend without trade (and) moves back to 5.
“It is actually a clear reflection that we cannot base our prices on that market,” said Mr Guvamatanga.
He said there was no need for businesses to increase prices on the basis of the recent fuel price adjustment following the announcement that oil companies should procure forex from the interbank market.