BY FIDELITY MHLANGA
THE Reserve Bank of Zimbabwe (RBZ) yesterday unveiled a cocktail of more measures on the administration of fuel, insurance and chrome ore exports, among others, to buttress the local currency regime.
Government last month outlawed the use of multiple currencies and introduced the Zimbabwe dollar, a decade after it became worthless.
In the RBZ Exchange Control Circular Number 8 of 2019, the RBZ said to facilitate increased accessibility of fuel in the country and to reduce pressure on the interbank foreign exchange market, direct fuel imports are now permissible.
This will be by way of allowing licensed oil marketing companies to open and operate nostro foreign currency accounts (FCAs), where corporates shall transfer funds into.
“Oil marketing companies licenced by the Zimbabwe Energy Regulatory Authority shall be required to open and operate a nostro FCA (transitory) which requires prior exchange control approval, wherein exporting corporates, embassies, non-governmental organisations, international organisations and individual organisations and individuals with access to foreign currency shall transfer funds into,” the RBZ said.
The central bank assured international organisations and embassies staff that their salaries shall continue to be freely transferable into individual nostro foreign currency account at the discretion of the embassy or organisation.
However, the apex bank added that this forex shall be converted to local currency when the individual wants to use it for domestic transactions. The same modus operandi applies to the humanitarian cash transfer programmes, grants and donations.
Furthermore, in line with Statutory Instrument 142 of 2019, the RBZ has directed all insurance premiums, including medical insurance payable by both individuals and corporates to local insurance companies or medical aid societies for various products and service, to be paid in local currency.
“For insurance premiums that have already been paid in foreign currency, insurance companies are advised that in the event of a claim, the component of foreign currency reimbursement or payment should be given to the policy holder for purposes of retaining the foreign currency or liquidating to local currency for purposes of paying service providers,” the bank said.
“For risk that the local insurance companies cannot absorb for corporates, as is the current practice, the insurance company should seek the approval of Insurance and Pensions Commission (Ipec) to externalise the risk. Where such approvals are granted by Ipec, the concerned corporate or institution is required to remit the insurance premiums direct to the external insurance company upon obtaining prior exchange control approval.”
Turning to blocked funds, non-repatriated funds to foreign entities or individuals, the RBZ said those to be registered will be for the period January 2016 to February 21, 2019.
These include foreign payments such as disinvestments, loan repayments, payments for goods and services.
“Blocked funds registration shall be limited to non-exporting companies’ institutions and individuals. Government, parastatals and other public institutions are not being registered under this arrangement. Disinvestments proceeds from the Zimbabwe stock exchange shall not be considered under the blocked funds since the remittances are allocated 15% of the available foreign currency on the interbank market in terms of guidelines for utilisation of foreign exchange communicated under circular number 2 of 2019,” the central bank said.
“The window for the submission for the registration of blocked funds, which started in February 2019, shall be closed on August 30, 2019. In this regard, authorised dealers are advised to communicate with their clients who have not yet registered their blocked funds to expeditiously do so before the set deadline.”
The central bank further directed large-scale chrome producers and smelters to pay chrome deliveries from small-scale producers through nostro FCA transfers to enhance operations of chrome ore production and exports.
This means no cash payouts are allowed to small scale chrome producers because they are required to open nostro FCA (exports) for purposes of receiving payment for chrome deliveries.
To ensure timely repatriation of export proceeds, with effect from August 15 this year, any exporter with recoverable overdue export receipts of US$400 000 and above, shall be required to access new export documentation on a prepayment basis.