News / Local
RBZ clears forex allotment backlog
09 Dec 2022 at 05:12hrs | Views
THE forex allotment backlog worth millions of dollars from the first 93 auctions on the Reserve Bank of Zimbabwe (RBZ)'s foreign currency auction has been cleared, deputy governor Innocent Matshe has said.
In an interview with NewsDay Business on the sidelines of the launch of the Zimbabwe National Chamber of Commerce second edition annual State of Industry and Commerce Survey 2022 yesterday, Matshe said: "The backlog that we experienced… has been cleared. Now, I am not talking about delays, I am talking about the backlog. That backlog was sterilised up to auction 93… we are now working to reduce the time to say when allotments are made, and allotments are run, the time for the recipient of the allotment to receive money in foreign currency accounts."
Owing to increased foreign currency shortages, in June 2020, RBZ established the forex auction system for companies to bid for United States dollars to use for productive purposes. However, foreign currency quickly ran out on the auction, resulting in a huge backlog with companies having to wait months on end before receiving their allotments.
"I don't want to give a figure of how much the backlog was, but it was substantial," said Matshe.
He said the applications for foreign currency on the auction used to average US$50 million, but it had now gone down to US$10 million, which was more manageable.
Companies have been struggling to get foreign currency from the forex auction due to tight controls instituted by the central bank that left a majority of companies without foreign currency, a situation made worse by poor forex generation.
This has been highlighted, especially by the largest manufacturing business membership organisation in Zimbabwe, the Confederation of Zimbabwe Industries, that exporting companies are failing to source foreign currency.
"What companies are complaining about now is not a backlog, but a delay and that delay is caused by the process that we go through in allocating foreign currency. It doesn't come everyday so we distribute it as it comes," Matshe said.
"The idea is, forex is in the system, we can see it, it is there, but we have to distribute it and that process takes time. Now, going forward, that backlog has been cleared, we are going to work on clearing the allotments in something like 14 days. So, you will still receive complaints about delays up to next year but that will narrow down."
As of October, total cumulative foreign exchange auction allotments since inception stood at US$3,6 billion.
In an interview with NewsDay Business on the sidelines of the launch of the Zimbabwe National Chamber of Commerce second edition annual State of Industry and Commerce Survey 2022 yesterday, Matshe said: "The backlog that we experienced… has been cleared. Now, I am not talking about delays, I am talking about the backlog. That backlog was sterilised up to auction 93… we are now working to reduce the time to say when allotments are made, and allotments are run, the time for the recipient of the allotment to receive money in foreign currency accounts."
Owing to increased foreign currency shortages, in June 2020, RBZ established the forex auction system for companies to bid for United States dollars to use for productive purposes. However, foreign currency quickly ran out on the auction, resulting in a huge backlog with companies having to wait months on end before receiving their allotments.
"I don't want to give a figure of how much the backlog was, but it was substantial," said Matshe.
He said the applications for foreign currency on the auction used to average US$50 million, but it had now gone down to US$10 million, which was more manageable.
This has been highlighted, especially by the largest manufacturing business membership organisation in Zimbabwe, the Confederation of Zimbabwe Industries, that exporting companies are failing to source foreign currency.
"What companies are complaining about now is not a backlog, but a delay and that delay is caused by the process that we go through in allocating foreign currency. It doesn't come everyday so we distribute it as it comes," Matshe said.
"The idea is, forex is in the system, we can see it, it is there, but we have to distribute it and that process takes time. Now, going forward, that backlog has been cleared, we are going to work on clearing the allotments in something like 14 days. So, you will still receive complaints about delays up to next year but that will narrow down."
As of October, total cumulative foreign exchange auction allotments since inception stood at US$3,6 billion.
Source - Newsday Zimbabwe
