MONETARY POLICY- PRE DISCUSSION WITH GOVERNOR
01/10/2018
– We are where we are cause electronic dollars are more than real dollars- local dollars coming from the government.
– Economy requires rightsizing
– Root cause of money supply growth is fiscal imbalances
10.8bn Gvt borrowing, which is more than market deposits ($9.7bn)
– Issue not about changing currency
Measures
– Strengthen multi currency system – separate fca accounts
– Ring fence fcy earners- nostro fca accounts and RTGS fca accounts
– Immediate effect- new money coming in or that which was already being Ring fenced
– Expectation is not necessarily new accounts to be opened
– People must know they don’t have fcy
– Negotiated with Afrexim for a nostro stabilization facility of $500m- to be in place by end of October
– Nostro fcy accounts pertains to free funds, exporters, portfolio investors etc
– Gold 30%, platinum and chrome 35%, tobacco 20% and others are 100%
– Banks to align systems by 15 October
– Banks pay interest on nostro fcy accounts
– No more 14 day window period for use of fcy
– Rate parity is going to be maintained
– Facilities to support RTGS fcy accounts for critical commodities – adding up to almost $500m from various lenders
– External Debt Arrear clearance expected within 6 months
Fcy payments – minimize externalisation
Invoice name should match account details
– High value transactions to be done via LCs
– Export proceeds to be remitted on time
– Purchase of fuel to be done in fcy by all international truckers.
– Same applies to foreigners buying goods in Zim e.g fuel and cooking oil
– Purchase of gold by jewelers from Fidelity now in fcy not rtgs
– Settlement of capital gains tax in fcy if selling property in fcy
– Disinvestments of investments outside Zim- the funds must be remitted back to Zim
– Introduction of Stat reserves to reduce liquidity – 5% on rtgs fcy account wef 1 November 2018 on a weekly compliance basis
– Aftrade window remain open for those entities requiring interbank support
– Introduction of TB auction system wef 1 Nov. Currently the RBZ was not being the involved in the pricing discussions.
– Continuation of the savings bonds. End of August it was $1.5bn
– Construction facility fund to be introduced – All in interest rate of 10%
– Reminder of capitalisation levels which are due 2020