Senior Business Reporter
The Zimbabwe Revenue Authority (Zimra) has begun using the market-determined rate to calculate duty on imported products after the Reserve Bank of Zimbabwe (RBZ) made a decision to float the exchange rate.
Last month, monetary authorities established an interbank foreign exchange market through which foreign currency could be easily traded.
By the end of last week, the RTGS dollar — which bundles together bond notes and electronic RTGS balances – was trading at 2,5:1 to the US dollar.
Zimra Commissioner-General Ms Faith Mazani told The Sunday Mail last week that the taxman was simply complying with the provisions of the new monetary policy.
“We are just using the interbank rate. People bring in their products, which they bought in US dollars, and we calculate value for duty purposes using the interbank rate of 1:2,5,” said Ms Mazani.
Zimra released a statement on Friday saying: “Following gazetting of Statutory Instrument 32 of 2019, a new currency, Zimbabwe RTGs Dollar (ZWR), has been created in ASYCUDA World.
“The new currency affects clearance of designated goods as follows: (1) the current balance in the Nostro FCA prepayment account will be converted to ZWR at the prevailing exchange rate with the USD; (2) all foreign currency payments will appear on the payment receipt or prepayment receipt as ZW RTGs dollars; (3) clearance of designated goods will continue to be done using the ‘F’ prepayment account and (4) all values on the bill of entry and Form 49 will be reflected in RTGs Dollars though payment would be made in forex as per legislation.”
Market watchers believe that floating the exchange rate will cut imports and make local producers competitive.
Buy Zimbabwe chief executive officer Mr Munyaradzi Hwengwere recently noted that the central bank’s intervention will make local products competitive since the currency peg (1:1) was driving the consumption of foreign goods.
Buy Zimbabwe is a lobby group for local companies that promote local goods and services.
“The 1:1 rate made it lucrative to import finished products than to produce locally. We were now punishing exporters and pushing them towards the brink.
“Last year, manufacturers were given up to $1,2 billion, but they only managed to bring in only $200 million, and that money was coming from tobacco and mining, which brought in around $3,5 billion.
“We had a situation where a gold producer would only receive 45 percent at 1:1 when costs had gone up by 300 percent.
“What the new measures do is that they restore sanity,” said Mr Hwengwere.
Through floating the exchange rate, he said, local manufacturers would, therefore, have to buy the US at a premium, which means imports would not be cheap as they used to be under the old exchange-rate regime.
“In the same vein, exporters now have more incentives to export given that they get their money in US dollars at prevailing market rates.
“It means that the export industry does not collapse through subsidising someone else, including manufacturers.
“The beauty of the (monetary policy) statement is that it seeks to sanitise the production cycle,” he said.
Buy Zimbabwe is now pushing for the new measures to be aligned to the Local Content Policy in order to enhance local competitiveness. On average, the local manufacturing sector is operating at below 50 percent capacity due to aging equipment, foreign currency shortages and competition from cheap imports.