Chronicle Editor
Prosper Ndlovu, Business Editor
THE Treasury has availed funding to the Reserve Bank of Zimbabwe (RBZ) to start clearing a backlog of foreign exchange auction allotments to businesses.
RBZ Governor, Dr John Mangudya, announced the development in a statement yesterday in which he stressed the need to restore confidence in the weekly formal forex auction system.
The move is expected to tame the speculative parallel market exchange pressures by establishing a reliable access to forex resources to different economic players.
This comes at a time when monetary authorities have taken a tough stance against illegal currency dealers and unscrupulous businesses that continue to distort the pricing system despite stable economic fundamentals.
“Further to previous communication that Government would be providing funds to clear the ring-fenced backlog of foreign exchange auction allotments, the Reserve Bank of Zimbabwe is pleased to advice the public that it is in the process of clearing the ring-fenced backlog after receiving the funds from the Treasury,” said Dr Mangudya without disclosing figures.
“The bank wishes to thank the Government for providing the funds to clear the backlog.
“This will go a long way in restoring confidence in the foreign exchange auction system as well as establishing the foreign exchange market.”
The bank has attributed the remaining backlog to malpractices by certain entities that were sponsoring multiple bids under the auction system.
Amid concerns over delays in disbursement of funds in the auction system, the RBZ Monetary Policy Committee took a decision last month to ring-fence the backlog payments so as to expunge them separately while meeting current allotments on time.
At that time backlog payments had risen to above US$100 million and the Treasury had managed to clear up to US$70 million.
Going forward, the RBZ has assured bidders that all auction allotments will be paid within two weeks from the auction date.
In order to further tighten money supply in view of recent developments on inflation, the Central Bank has since introduced special exchange rate-linked corporate open market operations bills for the purposes of directly dealing with the growth of money supply in the economy.
“These bills will be targeted at corporates with huge local currency balances or those receiving huge payments in local currency, as some of these funds are being used to destabilise the foreign exchange market,” said the Bank.
This measure is to support the stability of the foreign exchange market, in line with the MPC Resolutions of 27 August 2021.
Meanwhile, Dr Mangudya has urged foreign auction participants and banks to observe and uphold principles of good corporate governance and self-discipline to ensure high standards of business ethics and transparency for the stability of the economy in the short to medium term.
Online Reporter