HARARE - Reserve Bank of Zimbabwe governor, John Panonetsa Mangudya, has made a huge statement of intent on stamping out capital flight and plugging leakages in the economy.
In his maiden Monetary Policy Statement (MPS) released on Monday, the veteran banker announced a raft of measures aimed at instilling confidence in the economy and luring investors, following promises he made upon assuming his position.
Among the headline measures announced by Mangudya are steps towards plugging financial leakages which have plagued the shaky Zimbabwean economy.
“The Reserve Bank is concerned that Exchange Control audits conducted have shown that there is a significant amount of import payments not matched with acquitted Bills of Entry (Imports),” Mangudya said.
“This implies that some importers are making false payments which have no corresponding value of imports coming into the country. As at June 30, 2014, outstanding Bills of Entry (Imports) amounted to $5,8 billion, for advance import payments for the period January 2009 to June 2014.”
This development, said Mangudya, is worrisome as it demonstrates possible cases of illegal externalisation of foreign currency by some importers and the general lack of discipline in the economy
In order to curb externalisation and ensure that the country received true and fair value from its import payments, the central bank chief gave importers a reprieve of 90 days starting on September 1, running until 30 November.
The 90-day conditional amnesty allows importers to acquit their Bills of Entry with authorised dealers for advance payments for all imported goods.
“In instances where there were no imports being sourced the funds externalised should be repatriated back to Zimbabwe during this amnesty period,” Mangudya said.
“After the expiry of this temporary reprieve period, the Reserve Bank shall introduce an importers’ flagging criterion with high administrative penalties similar to those currently being applied on exporters with overdue export receipts.
“Exchange Control shall issue the applicable flagging framework for importers to be effected on delinquent importers with effect from December 1, 2014.”
The measures have been necessitated by errant importers who were not acquitting their Bills of Entry taking advantage of the liberalised current account framework, according to the RBZ boss.
The RBZ also gave conditional amnesty on unauthorised cross-border investments.
“The Reserve Bank is concerned that most of these cross-border investments have not complied with Exchange Control provisions. In fact, Exchange Control is inundated with requests for recapitalisation on the same non-performing unauthorised offshore investments,” Mangudya said.
“In some cases, offshore investors have falsely attributed the non-repatriation of dividends to the need to recapitalise their failing investments. The Reserve Bank is fully aware that some investors continue to externalise foreign currency earned from these offshore investments.”
Currently, the central bank has cases under investigation where local companies set up of shore investments without the approval of the monetary authorities.
The unauthorised cross border investments, observed Mangudya, earn profits and dividends which are not repatriated back into the country to benefit the domestic economy.
“Zimbabwean investors with unauthorised cross border investments shall be granted a 90-day conditional amnesty to give them sufficient time to regularise their offshore businesses with Exchange Control,” Mangudya said.
“The temporary reprieve on these delinquent cases means that the Reserve Bank will during that 90-day period, suspend its investigations and referrals for possible prosecution.”
Where cross border investments are authorised by the central bank, they are required to make regular quarterly submissions to the apex bank on their performance offshore and repatriate investment income back into the country to recoup the initial capital outlay.