RBZ issues administrative guidance for outstanding auction and retention balances

RBZ issues administrative guidance for outstanding auction and retention balances

HARARE, The Reserve Bank of Zimbabwe (RBZ) has issued through the Exchange Control department administrative guidance and compliance parameters to authorised dealers of foreign currency.

Exchange Control acting director, Tafadzwa Muvevi through section 35 (1) of the exchange control regulations statutory instrument 109 of 1996 issued exchange control directive RZ56/2024 on the dealings of outstanding auction disbursements and foreign currency retentions.

“All auction allotments arrears that accumulated from non-funding by the auction will be refunded to recipients at the current inter-bank exchange rate.

“To allow the new structured currency system to start on a clean slate, the refund will entail conversion of all outstanding auction allotments into a 2-year ZiG denominated investment instrument at an interest rate of 7,5% per annum.”

The bank clarified that for Exchange Control purposes, converting foreign exchange auction allotment arrears to ZiG-denominated investment instruments absolves the Reserve Bank of its foreign exchange obligation and liability.

Likewise, this conversion grants the beneficiary the advantage of preserving the value while holding the investment instrument.

In terms of outstanding payments on foreign currency surrender obligations the acting director said the bank will issue another instrument.

“All outstanding payments for foreign exchange purchased by Treasury under the 25% surrender requirement will be converted, using the prevailing US$/ZiG exchange rate, into a ZiG-denominated investment instrument with a tenor of one year at an interest rate of 7,5% per annum.

“The Reserve Bank Financial Markets Division will communicate with banks on the respective implementation framework,” Muvevi said.

The central bank stated that authorised dealers must persist in submitting the Daily Exporters Retention Return by 1000hrs, explicitly indicating both the 25% surrender portion and the precise amount transferred to the Reserve Bank.

“The afore-mentioned Exchange Control operational guide and compliance parameters shall be read with the Operational Guidelines for Structured Currency (ZiG) issued by the Reserve Bank’s Financial Markets Division to banks dated April 5, 2024.”

Authorized Dealers and market participants were instructed to guarantee the full implementation of the compliance criteria outlined in this Exchange Control Directive.

Exchange Control will conduct on-site, off-site, and focused ad-hoc inspections to oversee Authorized Dealers’ compliance with the measures outlined to facilitate the structured currency’s operationalisation.

“Market players that shall be found to be in violation of Exchange Control rules and regulations, shall be penalised in terms of Section 5(1) of the Exchange Control Act [Chapter 22:05] and Section 37 (i), (ii), and (iii) of the Exchange Control Regulations, Statutory Instrument 109 of 1996.”