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Zimbabwe Central Bank Introduces Currency Controls on Property Receipts

Critics said the new currency control measures would deal a blow to the local property market, undermine general economic confidence and prompt the emergence of clandestine real estate transactions

Moving to stem outflows of hard currency, the Reserve Bank of Zimbabwe has imposed controls by which sellers of real property will only dispose of the first $50,000 of receipts from such sales, with the balance remaining on deposit with the central bank.

Sellers would receive the balance in four payments over 12 months.

Sources in the property and financial markets said the central bank issued a directive beginning August ordering local banks to enforce the rule.

Though all property sales are affected, sources said the directive appears to particularly target foreign sellers intending to repatriate the proceeds of real estate deals.

Real Estate Council Secretary General Bennias Gweme said the Reserve Bank has not officially informed his organization about the new currency control measure.

"We recently organized a seminar which was attended by members of the Bankers Association of Zimbabwe and officials of the RBZ who ordered us to implement the new regulations which we have not yet been formally given by the central bank," he said.

Economic commentator Bekithemba Mhlanga said the measure will devastate the property market and "if one factors in the current rate of inflation, property sellers are being robbed at gunpoint by the RBZ to lend it money," said Mhlanga.

The Reserve Bank directive said interest of 10 percent will be paid on withheld funds.

Economist Prosper Chitambara of the Labor and Economic Development Research Institute of Zimbabwe told VOA Studio 7 reporter Jonga Kandemiiri that the currency controls will merely encourage clandestine property transactions.

The Reserve Bank's reputation as a custodian took a beating several years ago when it emerged that in 2007-2008 it had diverted funds placed on account with it by entities including the Global Fund to Fight AIDS, Tuberculosis and Malaria.