THE Reserve Bank of Zimbabwe has instructed local banks to stop offering overdrafts to customers seeking to settle their foreign obligations, as it battles to control a worsening foreign currency crisis.
Central bank governor, John Mangudya, said banks have been stopped from offering overdraft facilities for cross-border transactions.
Mangudya said: “We do not want foreign purchases backed by overdrafts. We stopped banks from doing it. What we want is to have these foreign payments funded by money in your account.
He said banks that wanted to support their customers “should arrange lines of credit for their customers”. “We need discipline,” he said, while addressing a public dialogue on the cash crisis in the capital last week.
Zimbabwe’s foreign currency situation has significantly improved due to increased inflows from agriculture and mining, with the central bank allocating at least $100 million to banks weekly since the second week of April to meet critical foreign payments and settling outstanding obligations.
The increased inflows of foreign exchange were also supported by draw-downs from the nostro stabilisation facility availed by the Afreximbank.
The allocations, since the second week of April this year, entailed funded bank accounts only. This has significantly reduced the real demand for foreign exchange and reduced the foreign payments backlog by more than 50 percent to $185 million.
RBZ governor Dr John Mangudya said the allocations went towards meeting various foreign currency demands that include essential imports and foreign payments, inputs for industrial production and discharging outstanding foreign payments obligations.
PRESIDENT Robert Mugabe’s embattled administration has for the first time admitted printing money in the form of a virtual currency through the Real Time Gross Settlement (RTGS), acknowledging this cannot be backed by United States dollar bank notes imported by local banks, the Financial Gazette’s Companies & Markets (C&M) can report.
Finance and Economic Development Minister, Patrick Chinamasa, made the disclosures in Parliament. He said: “Government funds its employees’ salary accounts through electronic transfers over the Real Time Gross Settlement platform. On the contrary, employees would want to obtain physical cash from the banks. This misalignment is the greatest cause of queues at banks for cash as both the Reserve Bank of Zimbabwe (RBZ) and banks would be required to withdraw foreign exchange from their nostro accounts to meet local cash demand.”
Nostro accounts are accounts held by local banks with offshore financial institutions. They are used predominantly to settle international obligations, including import of goods. Banks have used their nostro accounts to import US dollar bank notes but these have always been used to support real US dollar bank balances for local deposits.
PROCUREMENT of imported raw materials and capital equipment has become a nightmare for most companies as the Reserve Bank of Zimbabwe (RBZ) battles long foreign payment queues, an official has said.
Zimbabwe Revenue Authority (Zimra) board chair Mrs Willia Bonyongwe revealed this yesterday in the tax authority’s revenue performance report for the first quarter ended 31 March 2017.
She acknowledged the difficult macro-economic environment that has seen industry operations being hampered by delays in foreign payments due to the tight liquidity situation in the economy and biting cash shortages.
The beginning of the tobacco marketing season mid-last month as well as the implementation of Statutory Instrument 64 of 2016, which restricts importation of locally manufactured products, have not eased the crisis as much as anticipated, despite improvement in product quality and volume of sales, she aid.
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