Key Highlights
- We are where we are cause electronic dollars are more than real dollars- local dollars coming from the government
- Economy requires rightsizing
Root cause of money supply growth is fiscal imbalances
8bn Government borrowing, which is more than market deposits ($9.7bn)
Issue not about changing currency
Measures
- Strengthen multicurrency system – separate FCA accounts
- Ring fence foreign currency earners- Nostro FCA accounts and RTGS FCA accounts
- Immediate effect- new money coming in or that which was already being Ring fenced
- Expectation is not necessarily new accounts to be opened
- People must know they don’t have foreign currency
- Negotiated with Afrexim for a Nostro stabilization facility of $500m- to be in place by end of October
- Nostro foreign currency accounts pertains to free funds, exporters, portfolio investors etc
- Gold 30%, platinum and chrome 35%, tobacco 20% and others are 100%
- Banks to align systems by 15 October
- Banks pay interest on Nostro foreign currency accounts
- No more 14 day window period for use of foreign currency
- Rate parity is going to be maintained
- Facilities to support RTGS foreign currency accounts for critical commodities - adding up to almost $500m from various lenders
- External Debt Arrear clearance expected within 6 months
- Foreign currency payments – minimize externalisation
- Invoice name should match account details
- High value transactions to be done via LCs
- Export proceeds to be remitted on time
- Purchase of fuel to be done in foreign currency by all international truckers.
- Same applies to foreigners buying goods in Zimbabwe e.g. fuel and cooking oil
- Purchase of gold by jewelers from Fidelity now in foreign currency not RTGS
- Settlement of capital gains tax in foreign currency if selling property in foreign currency
- Disinvestments of investments outside Zimbabwe – the funds must be remitted back to Zimbabwe
- Introduction of Stat reserves to reduce liquidity – 5% on RTGS foreign currency account with effect from 1 November 2018 on a weekly compliance basis
- AFTRADE window remain open for those entities requiring interbank support
- Introduction of TB auction system wef 1 Nov. Currently the RBZ was not being the involved in the pricing discussions.
- Continuation of the savings bonds. End of August it was $1.5bn
- Construction facility fund to be introduced - All in interest rate of 10%
- Reminder of capitalisation levels which are due 2020