Zimbabwe Finance Minister pledges not to raid private foreign currency accounts

Zimbabwe’s Finance Minister Mthuli Ncube today said he will introduce regulations to guarantee that foreign currency accounts opened by companies and individuals are private deposits which the Reserve Bank of Zimbabwe and the government will not have access to.

In a statement in which he was clarifying the government position on currency, Ncube also said people’s money which will be in real time gross settlement accounts will be preserved at the rate of 1 to 1 with the United States dollar.

Addressing a meeting in London on Monday, Ncube said the market was now determining the rate of the bond note and the RTGS.

The rate has fallen to almost 4:1 since the central bank announced its monetary policy last week.

Mangudya said the bond note and the US dollar will continue to be at par. Ncube’s statement on Monday seemed to be contradictory to that of Mangudya leading to speculation that the two were not seeing eye-to-eye.

Full statement

THE NEED FOR ECONOMIC AND CURRENCY REFORMS

Further to the various measures that Government is putting in to accelerate economic reforms that are necessary to right-sizing the economy, it is critical to restate Government’s great commitment to reducing fiscal imbalances which are the root cause of the many challenges the economy is facing.

The challenges include cash shortages and the proliferation of foreign exchange parallel market rates which have a negative effect on prices. These challenges require that Government position the economy on a strong footing by implementing reforms that include cutting on government expenditure, working towards import parity pricing system, increasing efficiency on government delivery systems and fast-tracking the State Owned Enterprises reforms, among a host of reforms.

These reforms shall be accompanied by a strong and sustainable currency reform system which will follow after the execution of the above reforms. This is necessary to ensure that any currency reform programme that the Government would put in place is effective and that it has minimum disruption to the business.

Accordingly and in view of the need for an orderly currency reform programme that will be followed when the economic fundamentals are right to do, the country shall continue to use the multi-currency system which was put in place by Government in 2009. This system entails that foreign exchange earners are not prejudiced of their regulatory foreign exchange receipts and that those who do not earn foreign exchange have access to foreign exchange through the banking system as is per the current policy of foreign exchange management system. In parallel, the Reserve Bank shall continue to maintain adequate resources for the import of essential commodities.

Over and above the Nostro Deposit Protection Guarantee from Afreximbank, we are also reinforcing Nostro foreign currency accounts with a statutory instrument to guarantee that these are private deposits, and neither the Reserve Bank nor government has any access to them.

Government recognise concerns surrounding RTGS deposits, and we commit to preserve the value of these balances on the current rate of exchange of 1 to 1, in order to protect people’s savings.

Hon. Prof. Mthuli Ncube
Minister of Finance anti Economic Development
10 October 2018

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