Foreign currency-starved Zimbabwe has liberalised fuel imports by allowing authorised dealers to pay directly to foreign fuel suppliers upon exchange control approval in a move meant to ease pressure on the government and improve the supply of the precious liquid.
Fuel remains scarce on the local market, with long queues amid competing demands for foreign currency that have forced government to come up with a priority list, fuel being on pole position.
The liberalisation of the foreign exchange market by introduction of the inter-bank market in February and subsequent introduction of a local dollar and cessation of the multi-currency regime saw the interbank rates competitively chasing the parallel market.
“Authorised dealers are advised that, to facilitate increased accessibility of fuel in the country and to reduce pressure on the interbank foreign exchange market, direct fuel imports are still permissible,” said the Reserve Bank of Zimbabwe (RBZ) in Exchange
Control Circular Number 8 of 2019 to Authorised Dealers and Bureaux de Exchange published yesterday.
“Oil marketing companies licenced by the Zimbabwe Energy Regulatory Authority (Zera) shall be required to open and operate a nostro FCA (transitory) which requires prior Exchange Control approval, wherein exporting corporates, embassies, NGOs, international organisations and individuals with access to foreign currency shall transfer funds
The central bank also gave the green light for large scale chrome producers and smelters to pay for chrome deliveries from small scale producers through FCA nostro transfers.
However, no cash payouts are allowed under the scheme with all payments going through banks.
“In this regard, large scale chrome producers who wish to pay for chrome deliveries from small scale producers in foreign currency shall submit applications for operation of a nostro FCA (transitory) to exchange control, exports department for consideration,” RBZ said.
Chrome mining is largely seen as a key driver to Zimbabwe’s mining sector growth targets, key to achieving a middle class economy by 2030.
The central bank said foreign currency received by individuals and international organisations, NGOs and embassies is regarded as free funds for exchange control purposes.
Free funds may be used for settlement of foreign transactions for the procurement of goods and or services. The free funds may also be used for through nostro FCA transfers for the settlement of local contracts.
While employees of NGOs and embassies and international organisations can be paid in foreign currency, their salaries must be converted by a bureaux de change to transact locally. Expatriates or diplomats working for international organisations and embassies are allowed to remit their earnings to their home countries for the upkeep of their families through normal banking channels.
International organisations and NGOs were encouraged to convert their foreign currency earmarked for humanitarian programmes to local currency through banks.
“In cases where the cash transfers are paid in foreign currency to final beneficiary, the final beneficiary is required to convert the foreign currency cash to local currency, at a bank or bureau de change, for the day-to-day domestic transactions.
Diplomatic missions are allowed to continue charging for their services such as visa processing in foreign currency and such fees are freely remittable to their home countries in terms of the Vienna Convention, the central bank said.
Individuals can buy foreign currency from bureau de change for tuition, medical and subscription fees only after relevant documentation is submitted. The funds are not paid in cash, but direct to the beneficiary.
The bureau de change can sell and buy foreign currency of up to US$500 without asking for identities or documentation, the central bank decreed.
The RBZ, in the same notice, extended the deadline for bureau de change of equivalent of US$15 000 to December 3, 2019.
Insurance premiums in foreign currency were discontinued while for insurance premiums already paid in foreign currency, the component of the foreign currency reimbursement or payment should be given to the policyholder for the purposes of retaining the foreign currency or liquidating to local currency for purposes of paying service providers.
Blocked funds registration was limited to non-exporting companies, institutions and individuals.
Source: Business Times