eBusiness Weekly
Golden Sibanda
The Reserve Bank of Zimbabwe (RBZ) has announced revised qualification criteria for the US$1,2 billion external debt obligations the apex bank will assume from corporates.
The external debt liabilities represent balances of historical or legacy debts local firms contracted and balances with banks that could not be processed due to foreign currency constraints.
The funds became local currency after the RBZ in February directed that all electronic balances held by banks under multicurrency system, when the RTGS dollars was 1 to 1 with US dollar, be converted to local currency.
Together with the directive to convert to local currency, the central bank also introduced the interbank market under a floating exchange rate regime, effectively devaluing the previously US dollar balances.
Because bank balances included legacy debts, RBZ offered to assume the liabilities on a rate of 1 to 1 between the bank balances and the US dollar, giving total debt of US$1,2 billion.
Secretary for Finance George Guvamatanga, said the decision by the central bank was meant to protect the country’s image and reputation as a safe destination for foreign investments.
Guvamatanga also stressed that Government would extensively audit the external debt to be assumed by Government, since it will cost the tax payer significant money, adding the eventual debt might fall short of the presumed US$1,2 billion.
According to exchange control circular 8 of 2019 released on Wednesday, the funds which the central bank refers to as blocked funds, related to external obligations that could not be remitted between January 2016 and February 2019.
Disinvestments from the Zimbabwe Stock Exchange shall not be considered under blocked funds as they were allocated 15 percent of available foreign currency on the interbank market.
“The window for submission for registration of blocked funds, which started in February 2019, shall be closed on 30 August 2019. In this regard, authorised dealers are advised to communicate with their clients to expeditiously do so before the set deadline,” the central bank said.
RBZ said further to earlier guidelines, exchange control directive RU28 dated 22 February 2019, and to ensure only bonafide blocked funds are taken over, dealers should validate documentation from their clients.
“In addition, applicants are also required to submit a declaration that the indicated amounts have not been paid directly or indirectly to the external party and that application for registration has not been submitted through another authorised dealer.”
Banks are required to submit, in retrospect, blocked funds validation declaration forms and applicants declarations for blocked funds that have already been lodged with the apex bank.
The RBZ stressed that, as indicated earlier, the local currency equivalent of funds to be transferred to the RBZ relates to blocked funds that should have been registered by exchange control.
Further, the central bank has directed the banks to keep an updated list of blocked funds indicating all the details specified under exchange control directive RU 28 of February 2019.
