THE Reserve Bank of Zimbabwe (RBZ)’s decision to tighten regulations on withdrawals of foreign currency by Zimbabweans who earn their salaries in foreign currency faces litigation, while analysts warned the move would result in people spiriting away their money to offshore accounts.
A leaked FBC Bank instruction circular at the weekend indicated that the RBZ will, from today, be demanding written requests from people who earn in US dollars for them to withdraw their money while banks will also be ordered to convert all unutilised bank balances not withdrawn in one’s nostro foreign currency account within 30 days from day of deposit to local currency using prevailing interbank rates.
RBZ governor John Mangudya at the weekend confirmed the new rules, saying the document would deal with funds from exporting companies.
Former Finance minister Tendai Biti has, however, blasted the move, describing it as illegal and in contravention of section 71 of the Constitution.
“Government and the RBZ cannot be experts in doing lawless things because all these are desperate actions by a desperate, despicable regime. You cannot have a government that generates the suffering of its people on a day to day basis,” Biti said.
“Besides, this issue is unlawful and unconstitutional because a salary is protected by section 71 of the Constitution and no one has a right to appropriate anyone’s salary as this will simply force companies and employees to relocate their accounts offshore to countries like Botswana, Zambia and South Africa.”
Section 71 of the Constitution speaks on property rights, which includes pensions, annuity, gratuity, and similar allowances, and it states that any person anywhere in Zimbabwe has a right to acquire, hold, occupy, use, transfer, hypothecate, lease or dispose of all forms of property, either individually or in association with others.
Biti added: “This is foolishness being done by government which is desperate for foreign currency and they are now trying to grab every dollar of forex. We are generating about US$5 billion from our exports and so the issue is that the money is being spent by thugs and crooks.
“The issue is how government is using the foreign currency. Actually, forex must be credited to the Consolidated Revenue Fund and Parliament must be the one to distribute foreign currency through the Appropriation Account.”
Economist Kipson Gundani weighed in, saying: “Clearly, we have got a monetary regime which is transitioning from a dollarised environment into a mono-currency environment of the Zimdollar and what the authorities are then trying to do is to avoid a big-bang approach, where you overhaul things and overnight there is an effect.
“They are now trying to give precedence to bonafide United States dollar earners, but it distorts the market. If one is to access the US dollar and they access it through the banks, then they will be tempted to open off-shore accounts. These are some of the unintended effects that will happen if at all this is operationalised.”
Another economist, who preferred anonymity, said if the RBZ implemented this, then it would be a drastic measure with serious consequences.
“If it is real, then we can brace up for a fight because it will affect a lot of businesses and people. The effect is that foreign currency will be externalised and the RBZ will whip away the little confidence and trust remaining,” the economist opined.
The economist also described the RBZ move as synonymous to what happened in 2008 during former RBZ governor Gideon Gono’s era when he raided foreign currency accounts belonging to private businesses and foreign aid organisations to help sustain troubled government ministries.
In the year that followed, many then opted to stash their forex abroad and in 2017, an adviser to government on the ease-of-doing business, Ashok Chakravarti, called for an investigation into the externalisation of funds, as it had emerged that US$5 billion could have been siphoned out of the country since dollarisation in 2009.
The money was said to have been taken out and deposited into offshore accounts, thus depriving the country of the much-needed foreign currency.This subsequently plunged the country into serious financial crisis.