RBZ dismisses Mthuli Ncube interference claims; clarifies 25% export surrender policy – NewZimbabwe.com

By Alois Vinga

THE Reserve Bank of Zimbabwe (RBZ) has defended recent measures by Finance Minister Mthuli Ncube on the use of a 25% export surrender portion insisting the move is not a ploy to interfere with the central bank.

Treasury recently announced it will fund the 25% export surrender requirement to the central bank to slow down the ballooning money supply in a desperate attempt to save the free-falling Zimbabwe dollar, among several other changes.

The local currency has lost much of its value in recent weeks on the back of increased money supply attributed to government’s resumption of payments to contractors who in turn invaded the parallel market, offering higher premiums and in the process contributing to inflation.

On Monday, Ncube announced that Treasury will now fund the ZWL component of the 25% foreign currency surrendered by exporters, in order to eliminate the creation of additional money supply.

The nature of announcements made by Ncube which ordinarily are expected to come from the RBZ prompted public speculation there was a fall out between the Treasury and central bank.

RBZ governor, John Mangudya  however said the  management of foreign exchange from export receipts will continue to go through the normal banking channels with the central bank playing the pivotal statutory role of intermediation between banks and the Exchequer.

“In that regard, the Treasury is not intended to change the statutory requirements or merge fiscal and monetary policy jurisdictions. The essence of the new measures is that the government is now actualizing the provisions of the Finance Act No. 7 of 2021, which, inter alia, provide for the take-over of external loans on the Bank’s books.

“Government will provide the local currency required to purchase foreign exchange from part of the surrender portion of export proceeds for the purposes of servicing the external loans assumed by the State,” he said in a statement.

The central bank chief said the government will alternatively use its own foreign exchange resources to settle the said assumed foreign loans.

He added that the bank’s role shall be to ensure that all foreign currency arrangements, entered into by and between both local and foreign financial institutions and the Republic of Zimbabwe, are fully respected and loan obligations are serviced in accordance with the covenants of the respective underlying facilities or commitments.

“This will ensure financial system stability and that there are no disruptions in the financial markets.

“The Bank shall meet the Bankers Association of Zimbabwe and the Accountant General to agree on ways to ensure that the modalities envisaged in the policy measures are seamless, flawless and in line with best practice,” added Mangudya.