In order to save companies from collapsing due to cash flow problems, the Reserve Bank of Zimbabwe (RBZ) should clear the foreign currency backlogs of enterprises from the auction system.
The central bank should take the right action to clear the forex backlog as the enterprises were compelled to surrender the Zimbabwe dollar equivalent to it in advance.
The Reserve Bank of Zimbabwe already intends to give a two-year ZiG instrument to local businesses that have not received their allotted hard currency—which is estimated to be worth millions of dollars—from the foreign currency auction trading system, a condition that is harmful to business.
Adding insult to injury, exporters will also get a one-year ZiG instrument from the Treasury for the 25% of export earnings they have to surrender to the Ministry of Finance, Economic Development and Investment Promotion.
This has forced the frustrated companies to source the greenback from the black market, where the premiums are punitive.
RBZ governor, Dr John Mushayavanhu, confirmed the plan to issue a two year ZiG denominated instrument at an interest rate of 7.5% per annum.
He said this process will allow the beneficiaries to maintain the value of their proceeds under the new framework.
He also said all outstanding payments for foreign exchange purchased by Treasury under the 25% surrender requirement will be converted to a ZiG denominated instrument with a tenor of one year at an interest rate of 7.5% per annum.
“ Following the establishment of a refined interbank foreign exchange market, all outstanding auction allotments will be converted into ZiG and refunded to recipients at the current interbank exchange rate. This will allow the new system to start on a clean slate using the interbank foreign exchange system. The refund will entail conversion of all outstanding auction allotments into a two – year ZiG denominated instrument at an interest rate of 7.5% per annum,” Dr Mushayavanhu.
We urge the RBZ to quickly move to clear the forex backlog for companies to survive the harsh economic condition.
