Harare, Zimbabwe – The Reserve Bank of Zimbabwe (RBZ) has released new regulations for authorized dealers, aimed at tightening controls on foreign exchange transactions.
The updated rules were outlined in Exchange Control Circular No. 3 of 2024, which was issued under Section 35(1) of the Exchange Control Regulations, Statutory Instrument 109 of 1996.
In the circular, the RBZ referenced prior guidelines from April and May 2024, which provided a framework for the Interbank Foreign Exchange Market. The latest update introduces specific measures to prevent the duplication of invoices and ensure the responsible use of foreign currency.
Invoice Duplication Restrictions
The central bank acknowledged that many companies in Zimbabwe operate with multiple banking partners. However, it stressed that, moving forward, companies are limited to submitting invoices to no more than two banks for the same goods from the same supplier. “Authorized dealers are advised that for the pipeline demand, applicants are limited in submitting invoices to not more than two banks,” stated the RBZ. The aim is to prevent the same invoice from being duplicated across different financial institutions.
To enforce this, authorized dealers must ensure that their clients complete an Importers Declaration Form, which will confirm that the invoice has not been submitted to another bank. This declaration must be completed before the request can be added to the pipeline demand.
Efficient Foreign Exchange Usage
The RBZ also highlighted the importance of prudent foreign exchange management, urging market participants to avoid speculative stockpiling of goods. “Market participants are encouraged to effectively and efficiently utilize foreign exchange in the management and importation of stocks,” the circular noted. The central bank warned that it would conduct regular checks to monitor compliance with these guidelines.
Loan Proceeds and Interbank Market Participation
Another significant point addressed in the circular concerns the use of loan proceeds in the interbank market. The RBZ reiterated that market participants are prohibited from using proceeds from local borrowings to engage in the interbank foreign exchange market. “Market participants are not permitted to participate on the interbank foreign exchange market using proceeds from local borrowings,” the RBZ emphasized.
Participants will now be required to declare that their balances do not originate from loans when completing the Importers Declaration Form.
Use of FCA Balances
The central bank further directed that holders of Foreign Currency Accounts (FCA) with sufficient balances should use their funds for foreign payments before seeking to access the interbank market or pipeline demand. “FCA holders with sufficient balances in their accounts across all banks should first utilize their foreign exchange for foreign payments before accessing funds from the Interbank Foreign Exchange Market,” the RBZ advised.
Companies seeking to access the interbank market must sign a declaration confirming that they do not have sufficient foreign currency balances.
Compliance and Penalties
Finally, the RBZ stressed the importance of compliance with these new regulations, warning that any violations would result in penalties. “Authorized dealers are directed to ensure adherence to all Exchange Control compliance parameters,” the circular instructed.
Market participants found in violation of the Exchange Control rules risk being barred from participating in the interbank market and could face penalties under the Exchange Control Act and related regulations.
The circular, signed by F. Masendu, Director of Exchange Control at the RBZ, serves as a reminder to all authorized dealers to remain vigilant and ensure strict adherence to these new guidelines.