Businesses are considering taking legal action against the Reserve Bank of Zimbabwe (RBZ) over its decision to withhold payment for outstanding foreign currency auction allotments, reported Business Times.
The Central Bank failed to disburse the allotted hard currency amounting to more US$80 million to companies from the now-defunct foreign currency auction trading system.
RBZ Governor, John Mushayavanhu, has vowed he will not reverse the decision to withhold payment for outstanding forex allotments.
He said the central bank would issue non-negotiable certificates of deposit (NNCDs) or a two-year Zimbabwe Gold (ZiG) instrument at an interest rate of 7.5% annually.
Mushayavanhu also said exporters would also be issued with a one-year ZiG instrument from the Treasury for the 25% of export earnings they have to surrender to the Ministry of Finance. He said:
I’m sorry, but we are not going to budge. We had to lock the money up. I would rather inconvenience a few comrades than jeopardise the whole economy.
So, be it unfulfilled auction rate obligations or those issued by banks and so on, we are hoping to keep them as NNCDs.
When we talk about confidence in the economy, it is not something that can be legislated. So, we will think about it but not now.
Industry executives who asked not to be named told Business Times this week that businesses were considering suing the RBZ. One business leader said:
… some firms within our business member organisation (BMO) are mulling legal action against the RBZ as engagements are not yielding any meaningful results.
We are being sued left right and centre by our clients whom we have already taken money from and we cannot repay them.
Confederation of Zimbabwe Industries (CZI) president, Kurai Matsheza, said Mushayavanhu’s decision was bad for business. He said:
Various companies are owed a total of US$80m from the outstanding forex auction allotments and that is a lot given the current state of the industry in Zimbabwe.
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We have engaged the RBZ over the release of the aforementioned amount and we will continue to engage.
We will knock and continue knocking till the doors are open. Companies have thin working capital and are in dire need of that capital to ramp up production.
We hope that the governor will listen to us and release the amounts in batches.
In his 2024 Monetary Policy Statement, Mushayavanhu said following the establishment of a refined interbank foreign exchange market, all outstanding auction allotments will be converted into the new Zimbabwe Gold (ZiG) currency at the current interbank exchange rate.
He said this will allow the new system to start on a clean slate using the interbank foreign exchange system.
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