Zimbabwe’s central bank has ordered companies and all stakeholders to stick to new regulations outlawing the use of foreign currency for local transactions by ensuring that all prices of commodities and services are marked in bond and Real Time Gross Settlement (RTGS) denominations.
In a statement issued Tuesday signed by the Reserve Bank of Zimbabwe’s Exchange Control director, C. Tembo, the central bank said company executives should, with immediate effect, discontinue the multiple currency system.
“Authorised dealers are advised of the discontinuation of the multi-currency system with effect from 24 June 2019. All domestic transactions shall now be settled in Zimbabwe dollars, the sole legal tender in Zimbabwe which is represented by bond notes and coins and electronic currency i.e. RTGS dollars.”
The central bank said, “Effectively, the use of foreign currency to settle domestic transactions has been removed and the basket of multi-currencies, that is, USD, GBP, ZAR, EUR, BWP, JPY, CNY, AU$ and Indian Rupee shall only be used to settle international payments or those services exempt from this requirement as per Section 3 of Statutory Instrument 142 of 2019.
“Similarly, the pricing on all domestic contracts, including the displaying of prices in all outlets in Zimbabwe, shall be effected and/or displayed in the local unit of account.”
The RBZ also noted that authorized dealers are advised that the operation of Nostro Foreign Currency Accounts (FCAs) shall remain in place for purposes of receiving offshore funds and to facilitate foreign payments.
Several Foreign Currency Accounts such as remittances from relatives living abroad, offshore loan proceeds, foreign currency cash deposits funded from local trade before June 24, 2019, will remain in operation.
FOREIGN CURRENCY CASH WITHDRAWALS
The central bank said authorised dealers “are advised that unconditional authorization for foreign currency cash withdrawals by corporates has now been removed. However, withdrawals by the same on deserving cases such as road toll fees are now permissible only on a case by case basis subject to the application of Know Your Customer (KYC) and Customer Due Diligence (CDD) principles on the withdrawer. These principles to be applied should be in line with Anti-Money Laundering and Counter Finance of Terrorism AML/CFT regulatory requirements and best practice.
“Authorised dealers are reminded of the limit of export of cash in person or baggage which remains at US$2,000 per exit as per Exchange Control Directive RS119 dated 04 August 2017. For individuals, the current policy shall remain in force with Authorised Dealers also required to apply the usual KYC and AML/CFT standards.”
BUREAUX DE CHANGE OPERATIONS
In order to deepen the operations of the interbank foreign exchange market and to enhance the operations of Bureaux de Change, the central bank added that with effect from 25 June 2019, Bureaux de Change are now permitted to buy and sell foreign currency without any limit in terms of the amount.
The RBZ terminated the use the multiple currency system adopted in 2009 following historic hyperinflationary rates fueled by quasi-monetary regimes introduced by the central bank then led by Governor Gideon Gono.
Critics say the new regulations may hit a brickwall due to lack of fundamental economic measures in an economy marked by serious cash shortages, corruption and political problems.