Government is crafting a statutory instrument that will see the administration swooping on companies that are abusing the foreign currency auction system, Business Times has established.
The probe comes after President Emmerson Mnangagwa raised the red flag, describing the abusers as opportunists and malcontents who are pushing a “nefarious” agenda to cause regime change.
Finance and Economic Development permanent secretary, George Guvamatanga, confirmed to Business Times that the government was disturbed with the activities and would come down heavily on firms and individuals abusing the system.
“We are coming heavily on those companies that have been abusing foreign currency and such sabotage should never be tolerated,” Guvamatanga said.
He could not give more information on who was targeted.
Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya could not be reached for comment by the time of going to print.
However, several other well-placed government sources told Business Times this week that the net was closing in on the abusers of the foreign currency auction system. The sources said the government was targeting several companies including pharmaceuticals and hardware companies who are understood to be some of the biggest abusers of the foreign currency auction system.
“The lawlessness in the market has irked the government because there are companies like pharmaceuticals and hardware that are queuing every day for foreign currency at RBZ but go on to price their products at an unrealistic exchange rate. To make matters worse, the same companies are also not banking their money.
“Other companies targeted are those enjoying the 60% foreign currency retention regime but still go on to price their products at unrealistic rates, “the source said.
The development comes at a time when the central bank’s Financial Intelligence Unit has commenced investigations into firms and individuals who have been using shelf companies to get money from the foreign exchange auction and channelling it to the black market.
The RBZ recently said that some companies get foreign currency from the auction system at ZWL$84:US$1 exchange rate but would charge their goods and products to customers at a parallel market rate of about ZWL$120:US$1.
RBZ recently published a list of beneficiaries of the auction system. The central bank has also warned banks against offering overdrafts facilities to companies to buy foreign currency from the auction system saying such a move creates speculation in the market and promotes rent-seeking behaviour which drives inflation. Bidders are required to have a minimum balance equivalent to 50% in their accounts.