The Reserve Bank of Zimbabwe (RBZ) has threatened to freeze accounts of companies that are allegedly abusing the foreign currency auction system.
RBZ governor, Dr John Mangudya, said the central bank was aware of errant businesses in the habit of using exchange rates far removed from the ruling exchange rate despite obtaining US dollars from the auction system.
Addressing a Zimbabwe Chamber of Commerce(ZNCC) conference last week, Mangudya also said the bank Financial Intelligence Unit (FIU) will take action against businesses that are practising transfer pricing. He said:
Are you in Zimbabwe?
Read Pindula News without data on your phone on freedata.pindula.co.zw
Only Applicable to Econet lines
We were trying to use moral suasion all along, and as we traverse the journey towards 2021, we now want compliance. Others are using $85, others $95, and others $130. It is non-compliance.
The instruments are there, we have plenty of statutory instruments but compliance is our weakest point in Zimbabwe. (Businesses) are (taking) arbitrage opportunities.
We were using moral suasion, but we have our FIU, Criminal Investigations Depart, and the Police.
These things are, however, so difficult to police, we need self-introspection and self-discipline.
Businesses want to sell at $91, $95, but every day they come to the auction (for USD at $81,3) and when you go and buy in their shops they charge $95, $110, they think only of making money.
The $14 or $15 is exchange gains; this is arbitrage, we see it happening but we cannot police everyone, we need self-policing, this is lack of compliance, the FIU will come and close your accounts.
While the RBZ is afraid the delinquency by some businesses will trigger inflation, which appears to have stabilised, some say the variance could actually go up if other costs are taken into consideration.
One economist said an exchange rate of ZWL$81 plus overheads of say, ZWL$10, plus 20% mark up may go up to at least ZWL$110.
The economist added that the exchange rate is part of the costs incurred in getting the product onto the shelf “so that commodity may cost you US$1 not necessarily saying that the exchange rate is ZWL$110.”
More: The Herald