Sunday, July 1, 2018

RBZ tightens screws on forex dealers

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THE Reserve Bank of Zimbabwe has temporarily stopped giving US dollars to banks for withdrawal by individuals, as the latter are said to be at the centre of black market currency dealings.
The central bank has been importing cash to ease shortages, but the money is quickly diverted to the black market.
The RBZ is now concentrating on funnelling money to productive sectors to increase production for exports and boost foreign currency earnings.
In an interview with The Sunday News, RBZ Governor Dr John Mangudya said, “Even if we put a lot of money into ATMs, people will take the money and go and sell it because the US dollar is being looked to as an investment as opposed to being a medium of exchange.
“So what makes people take money from the ATM is that they want to sell it 50 cents above its value … it has become an industry of selling money but we need to sell products.
“… should we put more money into ATMs for people to get money or should we put more money into the industry, which is employing people? It’s better to go for the latter.”
Dr Mangudya said the apex bank would continue advocating for the multiple-currency regime until macro-economic fundamentals were addressed.
“Currency reforms require that we address the challenges that the economy is facing, which are your fiscal deficit, which is the major source of money in the market.
‘‘That fiscal deficit also affects the current account deficit because it feeds into more money even into the people’s pockets thus it increases the demand for imports.
“So the major economic challenge we are facing is that we need to first of all deal with fundamentals. Our issue is not a currency phenomenon. It’s about a production phenomenon. It’s about dealing with the fiscal deficit so that we bring the economy into balance,” said Dr Mangudya.
The central bank boss expressed satisfaction with the impact of the RBZ’s export incentive scheme.
He said several companies had increased exports by more than 70 percent and capacity utilisation by over 80 percent.
“We are quite happy that the export incentives that we are giving to the industry or to the economy are paying plenty of dividends. If you check all companies that are exporting now, they will tell you that the export incentive scheme was and is the panacea for increasing exports in Zimbabwe,” said Dr Mangudya.
He said the new political dispensation’s ease of doing business reforms were bearing fruit.
“If you put policy measures against capital people won’t invest because they will be skeptical that they will channel their investment for an empty cause but right now Zimbabwe is open for business.
‘‘These are the fruits of opening up the economy for business, just imagine it’s only six months (since President Emmerson Mnangagwa assumed office).
“Right now we feel we have done very well as a country under very difficult circumstances but we are not saying there are no challenges.
‘‘We need to celebrate that success as opposed to undermining ourselves, because companies have improved and people are getting employed,” said Dr Mangudya.