Top Banks, Firms Penalised For Failing To Account For USD Sourced From RBZ's Auction System
The Reserve Bank of Zimbabwe (RBZ) has penalised top banks and firms for violating exchange control regulations with some companies failing to account for United States dollars sourced from the central bank’s foreign auction system.
In a confidential RBZ report dated September 5 2022, RBZ’s Exchange Control Division wrote that it conducted on-site compliance inspections across the country to check how the firms were using funds from the auction.
The apex bank launched the foreign currency auction system in June 2020 and over US$3.5 billion has been extended to support key imports of raw materials and machinery.
There have been reports of companies and some individuals, who have abused the auction system for profiteering and arbitrage. However, the RBZ has consistently fought a vicious war with errant banks and companies.
In the report submitted to the Finance and Economic Development ministry this month, the central bank said it slapped penalties on importers who could not account for auction funds. Reads in part the report seen by the Independent:
Get Pindula News on our WhatsApp Channel
Subscribe here: https://whatsapp.com/channel/0029Va84dngJP21B2nWeyM3v
Exchange Control continues to conduct on-site compliance inspections on companies throughout the country funded through the auction.
From January 1 to date, one hundred and nine companies have been inspected. The objective of the on-site post auction validations is to account for auction funds utilisation so as to confirm receipt of value in the country.
Exchange Control has continued to levy administrative penalties on importers who fail to fully account for auction funds.
In addition to company on-site visits, Exchange Control is conducting onsite and offsite inspection on banks.
The exercises are meant to check whether banks are administering exchange control transactions consistent to policy. Exchange Control has fined errant banks for various violations (including) failure to pay funded auction allotments within 72 hours of funding by the bank (RBZ).
With eight months into the year, the foreign exchange situation remains favourable, and forecasts point to a good foreign exchange position at the end of the year,” wrote the Exchange Control Division.
Total foreign currency receipts for the period January 1 to August 31 2022 amounted to US$7,698 billion compared to US$5,815 billion received during the same period in 2021 representing a 32,4% (US$1,874 billion) increase. This affirms the significant growth in the level of receipts over the period.
This tremendous growth in total foreign currency receipts was largely driven by a 41% growth in exports (US$1,475 billion) over the period.
This amplifies the continued dominance of exports as a major source of foreign currency receipts, as they contributed about 65% of the country’s total receipts for the period.
Foreign Investment, particularly FDI, though still low, has registered a significant increase of 202% from 2021 of which 62% (US$20 million) of the foreign investment amount was invested in Energy Sector (Zimbabwe Electricity Transmission Company and SinoHydro Hwange Power Holding) from SinoHydro Corporation Holding Zambia.
As of August 31 2022, total international remittances amounted to US$1.833 billion from US$1.505 billion in 2021.
The total amount of diaspora remittances amount to US$1.069 billion up from US$894 million received during the same period in the year 2021.
International remittances on account of international organisations (NGOs) amounted to US$764 million up from US$610 million in 2021.