Pharmacies Abusing Central Bank Foreign Currency Auction – Mangudya

RBZ governor Dr John Mangudya
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RESERVE Bank of Zimbabwe (RBZ) governor John Mangudya has accused the pharmaceutical sector of abusing foreign currency auction privileges by selling imported drugs using black market rates.

However, he told Parliament’s Budget, Finance and Economic Development Committee that the central bank did not have the legal powers to stop them as there was no law to deal with such malpractices.

Mangudya, who appeared before the committee, said the bank was now asking the government to draft suitable legislation to curb the problem.

“We have requested government that they give more teeth to our instruments. What we have at the moment is not deterrent enough,” he said.

Mangudya said players in the pharmaceutical industry were some of the major culprits, who obtained foreign currency at the official rates, but were pegging medicines at black market rates.

Apart from major retail shops, many traders have refused to display the prices of their commodities in both local and foreign currency with customers getting to know the local currency prices at till points.

Mangudya added that the central bank could only suspend bidders from participating, using auction rules, but the rules still lacked legal grounding to make them effective.

He also told the committee the RBZ would soon institute audits of entities that were selling commodities in foreign currency but were not banking the proceeds, yet they continued to bid for allocations at the auction.

Under auction rules those with foreign currency holdings have to use these first before topping up with auction bids.

“We will this week publish another list of those who have benefited from the auction because this has also assisted us in identifying culprits who are abusing the auction as we have received tip-offs from the public,” he said.

Early this month, RBZ suspended 12 companies that were allegedly involved in transfer pricing from the auction system on suspicion they were offloading some of the money on the parallel market.

The auction system was adopted last year and has been credited for bringing stability to prices of commodities on the market.