…as it imposes additional measures to curb illegal forex dealings and parallel market price benchmarking 

Staff Writer

Finance minister Mthuli Ncube says the illegal trade in foreign currency and pegging of prices of goods and services at black market rates have created downside risks to macro-economic stability as well as eroding domestic and international competitiveness. 

This comes as black market rates have started to rise with quotes now past the 180x mark. Last month, the United Nations Conference on Trade and Development raised fears of stagflation in Zimbabwe’s economy due soaring food prices. 

Ncube described the indexation of prices of goods and services at parallel market exchange rates as “evil” and a significant contributor to price instability in the economy. 

Over the past 36 months, the government has introduced numerous initiatives to bring macro-economic stability, he said. These developments have also seen the rapid growth of privately held foreign currency reserves from levels of around US$300 million in 2018 to US$1.8 billion currently held in Zimbabwean banks. 

In the same vein, he said official reserves have increased from less than US$100 million to over US$1.2 billion currently, which includes the US$960 million recently availed by the IMF to Zimbabwe. 

Also improved access to foreign currency by all bona-fide businesses and individuals through the auction system. 

“However, a residual core foreign currency demand, fuelled mainly by speculative and store of value demand for currency on one hand as well as criminal and money laundering activities on the other has perpetuated and sustained the parallel market for foreign currency. 

“The result has been that despite large and small corporates, SMEs and individuals having access to the RBZ auction system, the existence of the parallel market has provided an opportunity for price benchmarking at parallel market rates notwithstanding the fact that some of the businesses are accessing their full requirements for foreign exchange via the official channels,”he said. 

These practices were the intended targets of SI127, he added. 

Below are additional measures to curb illegal forex dealings and parallel market price benchmarking

– Zimra to carry out compliance audits with respect to compliance with the Location Tax introduced during the 2021 fiscal year.

 
Zimra to carry out impromptu audits of corporate activities with a view of quantifying potential tax liabilities arising out of illegal forex trading. 

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FIU to closely monitor and analyse financial transactions to identify, expose and take action against perpetrators of money laundering and other financial crime. 


The capacity of the FIU and other law enforcement agencies to investigate and prosecute violations of the Bank Use Promotion Act as well as various AMLCFT laws will be enhanced. 


Regulatory bodies including the Public Accountants and Auditors Board will also be working on a framework to impose appropriate financial and professional sanctions on members of the accounting auditing and other professions who may be complicit in superintending over illicit affairs by corporate entities which they are charged with running. 


Businesses who disregard the law and continue to price their goods on the parallel market rates will have their licenses suspended. 


Encouraged members of the public to report to the FIU and the National Economic Conduct Inspectorate all business entities directly or indirectly benchmarking prices at parallel exchange rates – Harare

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