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US$50 000 to immediately access their proceeds in full.
The policy, which came into effect on August 1 this year was meant to curb externalisation. It only applied on cross border remittances of immovable property sales proceeds by Zimbabweans.
Since the adoption of the multi-currency system in 2009, the central bank noted there was an increase in external remittances of foreign currency arising from the disposal of immovable properties.
It is estimated that the trend could have resulted in over US$20 million being remitted offshore within 12 months since February 2009.
The remittances, from both locals and foreigners were for undisclosed purposes, which in some cases were tantamount to externalisation.
Under the policy, property sellers were required to open Foreign Currency Accounts (Property) with local banks, with net proceeds of sold properties required to be deposited in an account after the deductions of statutory fees such as taxes.
Once deposited, certain sellers were entitled to access 100 percent of the net proceeds, while some would immediately receive US$50 000. The balance would remain in the FCA and subject to remittance in four equal tranches over a period of 12 months.
The retained amount, which would be paid over a year, would earn interest.
The balance could also be used to import goods and payments for essential services, but only when enough supporting documents were submitted to banks.
Where a locally based Zimbabwean was disposing of a property to buy another, the purchase price of the identified new property would be transferred from such individual account to the sellers’ FCA.
Permanent emigrants with Foreign Control Exchange Status, deceased estates with beneficiaries staying abroad and individual foreign property owners were entitled to 100 percent of net proceeds.
The central bank said in statement that after stakeholder consultations, it decided to shelve the policy until further notice following misconceptions and misinterpretations in the property market.
“Authorised dealers are advised that in order for the Reserve Bank to address various misconceptions on the policy, the implementation of the policy has been suspended until further notice,” said the central bank.
“In processing request for these off shore remittances, authorised dealers shall, however, be required to apply the Know Your Customer and exercise maximum vigilance and caution to ensure that transaction being processed are authentic.”
The central bank said the suspension should not be misconstrued as “opening the flood gates” for externalisation or liberalisation of Capital Account. Analysts said such huge outflow without any corresponding benefit to the country was worsening the country’s already tight liquidity position.
This also had a negative impact on the country’s capital account of the balance of payments, which are not yet fully liberalised.
“It must be noted that remittances of proceeds from sale of immovable properties are classified as capital account transaction, which mist be managed to avoid foreign currency leakages,” said one analyst. Such
transaction need to be properly managed, especially when the economy is grappling with shortage in liquidity on the market.”
The central bank said the policy should not be viewed as the introduction of currency controls.
Online Reporter