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Monday, 25 February 2019 07:36

Monetary Policy Key Highlights and Measures

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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
    Read 26 times Last modified on Monday, 25 February 2019 11:01

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