New exchange rate reached by consensus

The exchange rate of $800 to the greenback on the second half of all proceeds from exports was agreed to by the three social partners in the Tripartite Negotiating Forum and could bring back sanity in the forex market.

The business community pledged to the government to meet negotiated and agreed production and export targets as well as to cooperate with monetary officials to ensure full accounting of export proceeds.

The rate would enable export support rate predictability, exporter viability, competitiveness of formal exports and increased production of export goods and services.

The new rate, it was argued, would increase investment into export oriented sectors and bring about increased confidence in long-term export oriented investments such as mining, as well as increased foreign currency inflows through official channels.

There have been reports that 80 percent of the foreign currency coming into the country was going through the parallel market.

The TNF, however, said the Reserve Bank of Zimbabwe should review the exchange rate on a quarterly basis in consultation with the Ministry of Finance.

Initially the business sector had proposed that the present multiple exchange rates be maintained but the figures be reviewed. It had suggested that for the mining industry to survive it needed an exchange rate of $1 350 for its other half. The horticultural sector needed an exchange rate of $1 200 while other exporting sectors were comfortable with $800.

Sources say, Confederation of Zimbabwe Industries president Anthony Mandiwanza even threatened to step down as president of the industrial body if a new exchange rate was not agreed to.

The major argument for adopting a single rate was that multiple support rates within a single system were distortive and not desirable particularly if prospects for a single unified rate convergence were slim. It was therefore recommended that the official exchange rate remain at $55 to the US dollar for official transactions.

It was also suggested that with more than two million Zimbabweans working outside the country, these expatriate Zimbabweans should be allowed to open foreign currency accounts to provide an immediate source of foreign currency to the country.

The TNF, however, noted that to attract non-residents to bring their money into the country, the government would have to take measures to restore confidence in the security of corporate and personal FCA accounts.

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