INDUSTRY says it has understood the objectives behind Statutory Instrument (SI 127), but contends monetary authorities must adopt an iterative approach to tracking its impact and efficacy.
SI 127 caused a stir among business leaders and economic analysts who predicted the policy instrument, which prescribes civil penalties for abuse of foreign exchange rules, will upset the market.
The Zimbabwe National Chamber of Commerce (ZNCC) is on record saying the exchange rate is one of the most sensitive instruments, which can build or destroy market confidence alongside interest rate policy.
The business grouping said SI 127 of 2021 was not implementable unless everyone can access from the auction.
Businesses were given two weeks to regularise their systems so that they can comply with the statutory instrument on the receipting of goods and services in either foreign currency or local currency.
Under the new regime, businesses will be fined $50 000 or its equivalent in foreign currency for refusing to take payment in local currency at the official exchange rate, as determined on the auction.
Banks with clients that violate the regulations will also be fined. Those found guilty of diverting the forex obtained from the auction for other purposes will now be fined up to f $1 million or its forex equivalent.
Also gazetted under SI 127 is penalisation of a natural or legal person guilty of being a seller of goods or services not authorised by law to charge for them exclusively in foreign currency (USD).
Confederation of Zimbabwe Industries (CZI) president Henry Ruzvidzo said concern for business over S I 127 was on how to maintain the growth trajectory and strengthen confidence in the local currency.
“Industry is committed to ongoing engagement with authorities and to solving issues that slow the economy and affect competitiveness,” Ruzvidzo said in an interview with Business Weekly.
While the industrial lobby group now understands objectives of SI 127, Ruzvidzo said, such policy instruments require adoption of an iterative engagement approach to track its impact and efficacy.
According to the Reserve Bank of Zimbabwe, the purpose of SI 127 is to ensure that those businesses or individuals obtaining foreign exchange from the auction system do not use parallel market rate.
“The use of parallel exchange rates of above 100, for example, on funds obtained from the auction at $85 to US$1 is not good for the economy and consumers. It is these anomalies or arbitrage opportunities that the S.I is designed to deal with,” RBZ said.
SI-127, 2021, empowers the central bank to impose severe civil penalties on businesses and individuals who violate Zimbabwe’s foreign exchange rules, especially relating to funds from the forex auction system.
Zimbabwe introduced the foreign exchange trading system in June last year, to provide a market based exchange rate determination system, which would guide proper pricing.
The southern African country has witnessed rapid reduction in inflation, from 837 in July 2020 to 162 in May 2021, since introducing the foreign currency trading system, which stabilised the Zimbabwe dollar exchange rate.
