Government not entertaining blocked funds appeals

GOVERNMENT will not entertain new appeals for approval of blocked funds from companies and individuals as the process was completed in 2020 and the Treasury has completed the registration and validation, Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube has said.

The term blocked funds describes money that a foreign company or organisation earns in a country, but that cannot be paid out right away due to Government laws, capital flow constraints, or, in our instance, a lack of available foreign currency.

The Government assumed responsibility for block funds, which are essentially debts, through Finance Act No 7 of 2021 which provided the list of claimants approved and registered by the Reserve Bank of Zimbabwe through the commercial banks of claimants.

In a statement, Prof Ncube said there has been an influx of applications for release of blocked funds from individuals and companies.

“Treasury has noted the recent influx of companies/individuals that are appealing for the approvals of blocked funds through the RBZ and Treasury.

“Please kindly note that the application for the approval of blocked funds was completed in 2020. Treasury has already completed the registration of all blocked funds and the validation of the same,” he said.

“It is against this background that Treasury wishes to advise the public that the process of validation of foreign exchange applications submitted under the Blocked Funds Framework announced in the Monetary Policy Statement on 22 February 2019 has since been completed and the claimants have already been dealt with through issuance of Treasury bonds and cash payments arrangements,” added the Finance Minister.

In terms of the Finance Act No 7 of 2021 a creditor means a legal person, or the person’s successor in title, who, being a foreign counter-party, provided a loan or advance or goods or services to a person resident in Zimbabwe and was entitled to such payment for goods and services or dividend or return on investment in foreign currency, but where the foreign currency could not be repatriated from Zimbabwe.

The approved claimants all submitted their claims by April 30, 2020, for validation by the Reserve Bank of Zimbabwe, before the Treasury was given the directive by Parliament to pay out the money in the scheme that is being and has been implemented.

In July 2019, after the introduction of the interbank rate and conversion of bank balances to Zimbabwean dollars, the central bank assumed the foreign debts of some corporates.

The funds relate to external obligations that could not be remitted between January 2016 and February 2019 due to foreign currency shortages.

In early 2022, the Government released 580 names of companies and individuals whose funds could not be repatriated out of the country, with CBZ emerging as the most exposed entity.

The list of companies, mainly in the banking sector, the aviation industry, petroleum and manufacturing, in general, are contained in Act Number 7 of the 2021 Finance Act.

According to the Act, the Government is liable for a total of US$2,5 billion for funds belonging to foreign counter-parties that provided loans and credit facilities to “a person resident in Zimbabwe and was entitled to such payment”, but could not be paid when the funds were due.