‘RBZ to clear US$175m auction backlog within a month’
…Maintains bank policy rate at 40%
BUSINESS REPORTER
The Reserve Bank of Zimbabwe (RBZ) will clear the US$175m foreign exchange allotment backlog within a month among a raft of measures to improve efficiency of the auction system, according to minutes of the bank’s Monetary Policy Committee (MPC).
Companies have been struggling to get the allotted foreign currency with an estimated backlog of two months.
“The MPC urged the Bank [RBZ] to clear the backlog in a month’s time to enable the Bank to operate the auction system within the set rules of funding auction allotments within two weeks from the date of auction,” RBZ governor John Mangudya said in a statement.
He said the MPC also emphasised the need for banks to avoid the use of overdrafts to fund auction allotments except in exceptional circumstances in support of productive sector activities.
He said the foreign exchange auction system will be refined to enhance its purpose as a dependable and efficient mechanism of availing foreign currency to the economy by aligning the auction bidding process to the ultimate beneficial ownership concept.
The MPC has maintained the US$500 000 and US$20 000 maximum bid limits for primary producers under the main auction and SMEs auction, respectively.
It capped bid limits for secondary users, consumables and services at US$100 000 under the main auction and encourages the business community and banks to ensure that they exercise customer due diligence on all foreign exchange transactions in compliance with international best practices.
The MPC has further liberalised the operations of bureaux de change to promote financial inclusion by allowing them to process small value foreign currency transactions of up to US$50 per person per week on the basis of individual identities, with charges and commissions levied by the bureaux de change not exceeding 10% per transaction.
The Committee maintained the bank policy rate at 40% per annum and the interest rate on the Medium Term Bank Accommodation Facility at 30% per annum.
It also maintained the reserve money target at 20%, with the desire view to “achieving a lower level of monetary expansion by year end, particularly if inflation and other macroeconomic developments make it necessary and prudent to do so”.
