Statutory Instrument 118A at a glance

June 30, 2022

President Emmerson Mnangagwa this week used powers provided for in section 2 of the Presidential Powers (Temporary Measures) Act to enact Statutory Instrument 118A of 2022 which can be seen as a step in cementing the multicurrency regime we currently have which will be seen as a positive step by lenders within our economy.

Before the promulgation of SI118A of 2022 financial services providers were unable to enforce payment of USD loans in the same currency with courts insisting that court order provide for payment in local currency at the applicable auction rate on the date of payment.

What the new instrument seeks is to mainly enforce payment of foreign currency loans in the same currency it was received.

Similarly, to avoid abuse of its provision the enactment also makes it pre-emptory for repayment of a loan to only be accepted in the currency it was taken and or paid out.

The Statutory Instrument has provided for penalties where an entity which receives repayment of its foreign currency loan in Zimbabwean dollars, penalty of which maybe the sum total of the loan dispensed, penalty of which shall be in the sum of the total of the loan amount. In the event the penalty is unpaid it will Subject to 5 percent per day.

The next question becomes undoubtedly to whom this is applicable and whether all loan dispensed can be covered under this instrument and the unfortunate news is that the instrument will only apply to loans which are provided only by a authorised dealers, financial institution registered under the Banking Act or Microfinance Act.

Lastly, the instrument seeks to enforce pricing in line with the official exchange rate by providing that payment for goods and services can only be priced at an exchange rate which is not more than ten percent above the RBZ interbank rate. Failure to comply may result in a penalty.

Business persons are encouraged to take note of these new provisions to avoid infringing the law as ignorance of the law is never a justification for non-compliance.

Fungai Chimwamurombe is a registered legal practitioner and Senior Partner at Chimwamurombe Legal Practice and can be contacted for feedback at fungai@ zenaslegalpractice.com and WhatsApp 0772 997 889. Simba Mukwekwezeke is a senior associate, email: simbarashe@ zenaslegalpractice.com.

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