Statutory Instrument 127 to bolster ZW$

Zivanai Dhewa

In its effort to bring sanity to the country’s financial dealings and to end speculation and currency manipulation, the Ministry of Finance and Economic Development through the Reserve Bank of Zimbabwe (RBZ) has introduced Statutory Instrument 127 of 2021: Presidential Powers (Temporary Measures) Financial Laws Amendment) Regulations, 2021.

In its key summary statement, the SI 127 specifically expounds activities and penalties in violation of the Foreign Exchange Act Chapter 22:05.  This was necessitated by the realisation that individuals and companies had taken to manipulating the Foreign Exchange Act and the Banking Use and Promotion Act, by falsifying information in order to access foreign currency at the Foreign Exchange Auction and divert it to the black market.

Highlighting the civil infringements on the Foreign Exchange Act Chapter 22:05, the summary said, “One will be guilty, if he or she without Exchange Control authority uses the foreign currency obtained directly or indirectly from a foreign exchange auction or an authorised dealer for a purpose other than that specified in the application for foreign currency.”

Economic Analyst Dr Prosper Chitambara emphasised saying, “Let it be known to both wholesale and retail outlets that exclusively demanding settlement in USD for goods and services is prohibited and draws a severe charge.

The SI 127 of 2021, states that “One will be guilty, if he or she being a seller of goods or services not authorised by law to charge for them exclusively in foreign currency, refuses to allow any buyer thereof to tender payment for them in Zimbabwe dollars at the ruling exchange rate.

 “One will be guilty, if he or she submits to the Reserve Bank an application for foreign currency or exchange control authority, or a return or any other document in connection therewith, without exercising reasonable due diligence to verify the correctness of the information in or accompanying the application, return or document," the SI 127 states.

Government has managed to significantly stabilise the country’s economy, and to curb the inflation rate to 161.91 percent in May from 194.07 percent in April of 2021.  As of 26 May 2021, the weighted average exchange rate was at ZW$84 to the USD, yet the black market the rate stands at ZW$132 to the USD.

Meanwhile, Zimbabwe's annual consumer price inflation dropped from 362.3 percent in January of 2020 to the current rate of 161.91 percent following the introduction of a foreign exchange auction trading system which brought stability to the foreign exchange market. In this regard, SI 127 of 2021 would continue to consolidate the gains of the Auction System as well as propping-up the value of the ZW$ to the USD.