The Bankers Association of Zimbabwe (BAZ) on Monday said it has received commitments from the apex bank that it is going to clear all outstanding foreign currency auction system allotments backlog by end of this month.
This comes as the Reserve Bank of Zimbabwe (RBZ) keeps on promising to clear all outstanding allotments but failing to do so many times.
Previously, the backlog was estimated to be around $100 million USD.
BAZ chief executive Fanwell Mutogo told the portfolio committee on budget, finance and economic development that they were basically allocating more than what they were getting, resulting in the creation of a backlog.
“I must say that there has been an adjustment in terms of making sure that we allocate only that which we have,” he said.
Without giving figures, he said the current backlog is on a reducing trend. As a result of the forex backlog, the market experienced a spiraling of the parallel market rate as companies bought currency in the alternative market to minimise disruptions. On the parallel market, one US dollar can sell for ZWL$160x.
“Our backlog figures are reducing. Yes, according to the previous promise, they were supposed to have been retired by the end of May, but I think because of some administrative issues, the deadlock has been extended to the end of June and we have commitments from the RBZ.”
On the operations of the auction system, he said settlement of successful bids is done within 2 weeks.
Cumulatively, the foreign exchange auction allotments since the inception of the foreign exchange auction system total close to $3 billion. The bulk of these funds were channeled towards the procurement of raw materials, machinery and equipment.
The auction system was created to bring transparency and efficiency to the allocation of scarce resources like foreign currency. However, the widening gap between the official and black market rates continues to be a cause of concern for many companies.
“From where we stand, this is really a national problem because when you look at it, it is about the behaviors that we are all seeing in this market of rent seeking and people taking advantage of the situation,” Mutogo said.
He said it is very difficult for them to really try and pin down where this lack of discipline is really coming from.
“I think it is the nature of this economy. I do not think you can see this happening in other economies, but from where we sit, it is very difficult for us to control everything. What we can control is what we are doing officially in terms of what is happening at the auction.”
Latifa Kassim, head of treasury at Nedbank, added that the auction system under the current situation where we have got foreign currency scarcity “is the best route to try and spread evenly as much as possible these scarce resources to the rest of the market.” – Harare