RBZ Faces Criticism Over Forex Management Policies

The Reserve Bank of Zimbabwe (RBZ) has come under scrutiny for its directives regarding foreign currency (forex) management, with accusations of undue interference in companies’ cash flow operations.

Recently, RBZ Governor Dr. John Mushayavanhu stated that companies should prioritize using their foreign currency account (FCA) balances before accessing forex from the interbank market for external payments.

Despite Mushayavanhu’s assertion that there is adequate forex available, industry leaders argue that accessing forex through the interbank market remains challenging.

Many importers struggle to secure forex despite the banking sector holding approximately US$3 billion in foreign currency deposits.

The situation underscores ongoing difficulties in equitably distributing forex among economic agents, despite Zimbabwe earning US$11 billion in foreign currency in 2023. Moreover, businesses report holding significant amounts of Zimbabwe Gold (ZiG) currency, which they cannot effectively utilize for critical imports due to forex shortages.

This impediment poses challenges to the government’s efforts to promote ZiG as a viable domestic currency alongside the US dollar until 2030. Dr. Mushayavanhu defended RBZ’s stance, emphasizing that ZiG is backed by substantial reserves, primarily in gold and US dollars, aiming to stabilize a historically volatile currency environment. However, business leaders argue that RBZ’s directives constrain financial autonomy and market dynamics, urging for greater flexibility in managing forex and domestic currency balances.

Industry stakeholders, including the Confederation of Zimbabwe Industries (CZI) and Zimbabwe National Chamber of Commerce (ZNCC), have engaged with authorities to address forex access issues and enhance ZiG’s acceptance across the economy. Critics argue that RBZ’s stringent policies risk fostering informality in financial transactions and undermine market-driven economic activities.

Economists and business representatives advocate for policies that allow companies to manage their cash flows autonomously, emphasizing the need to facilitate broader acceptance and functionality of ZiG in everyday transactions. As Zimbabwe continues its economic stabilization efforts, balancing forex management policies with market realities remains crucial for sustained economic recovery and currency stability. *Nhau/Indaba*

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