Zimbabwe Finance Minister says given the US$1 billion from IMF there is no reason why Zimdollar should continue to weaken


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HON. GONESE:  My supplementary question to the Hon. Deputy Minister is; what is the rationale, what is the point of imposing these penalties when business people and traders say that they are not accessing money on the auction rate and that they have had to resort to buying money at the parallel or black market rate? You are imposing penalties upon people who have not obtained money from that official auction rate.  To compound matters Hon. Deputy Minister, we now have a situation where people who have bid for money on the auction are not actually accessing the foreign currency, there is a waiting period, weeks before they actually get money on bids which have been accepted.  What is the Government doing to ensure that even those who have made bids get the actual dollars, the actual money as opposed to a situation where they simply have bids which have been accepted?  More importantly, how do you penalise people who are not accessing money at the official rate? You are saying you are going to penalise them, you have put a Statutory Instrument which is punishing people who are not benefiting from that auction rate, can you please respond to those two aspects?

HON. CHIDUWA:  Thank you Hon. Gonese for the question.  I would say in terms of the penalties, we have been very strict, especially on those who are accessing foreign currency from the auction.  So I would say the focus has been mainly on those who are accessing foreign currency from the auction.  It is not a blanket thing, but for those who are not accessing foreign currency from the auction, we have also seen cases where pricing models are based on highly speculative black market rates.  If we say that the black market rate is hovering around say 120 and all of a sudden, there is someone who is using 180 where we have got cases of outliers, we have also penalised even if one is using their own foreign currency.  So this is where we are with regards to penalties.

Then the issue of not being able to access foreign currency after biding, yes we have got a problem but this is an issue that we are addressing. We have also seen some activity from the banking sectors who have engaged our banks.  From the last statistic that we got, we have US$1.8 billion that is sitting in the banks and we have engaged our banks.  So slowly we are seeing banks that are now participating, providing overdrafts to our importers.  As you can see, the issues are being addressed and we are hopeful that more banks will be coming on stream to participate and also assist our productive sector. I thank you.

HON. MUSHORIWA: The black market rate is 166/150 thereabout whereas the auction rate is hovering around 85.  Now my question Hon. Minister is to simply say given such huge differences, is it not possible that the foreign auction system is actually fueling the rise of the rate on the parallel market because the people that are getting the money at the auction rate are actually  doing arbitrage and making sure that they take this money, use half of it or less and then offload the rest on the parallel market?

HON. PROF. M. NCUBE:  Thank you Madam Speaker and I thank Hon. Mushoriwa for the questions.  There are two things.  First of all, we will not follow the parallel rate.  We want to be clear about that because it is a rate that is driven by the minority of economic players.  The majority of the economic players are receiving money from the auction.

In the last 12 months, at least companies have received no less than US$400 million for re-equipping purposes.  I am just targeting one area that is retooling.  Secondly, anyone is free to express whatever exchange rate they wish to purchase the United States dollars at.  So those who feel that they ought to be buying the United States dollar at higher prices –  they are free to express that wish through the Dutch auction.  Why do they not go ahead and do that?  Why should the whole market then be forced to shift towards power rate, shadowy people that we do not understand?  I thank you Madam Speaker.

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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