Mthuli Ncube assures FCA holders

Finance and Economic Development Minister Professor Mthuli Ncube yesterday assured Foreign Currency Account holders that Government will not raid their hard currency, instead adequate measures will be put in place to ring-fence them.

Prof Ncube said the decision by the old dispensation in which corporates, embassies and individuals lost their hard currency after they were raided will not "happen again under my watch" as people would access their money on demand.

The Head of Treasury said this last night while responding to questions from journalists during a press briefing on Cabinet resolutions. Cabinet met yesterday as per tradition.

Journalists had asked what assurances were there that Government through the central bank would not raid FCAs as what happened in the 2008 where account holders lost their money as the Reserve Bank of Zimbabwe performed quasi-fiscal activities.

"I want to assure you that these FCAs will not be raided. They have been ring-fenced. These are kept offshore and you have a mirror account (domestic) which reflects those accounts. You know what happened the last time we did that, when we shut them down, the US dollar just disappeared. So we have learnt that if you raid these FCA, if you shut them down the US dollar disappears and you go back to disintermediation, which is what we have now," said Prof Ncube.

"So we learnt a hard lesson. I would not recommend that to anyone to say raid people's accounts. It is not a good idea, not under my watch if I am allowed to watch over those FCAs as Minister of Finance."

Prof Ncube said Government would put enforcement measures to ensure that the policy announced this week in which foreign trucks on transit must buy fuel at local service stations in foreign currency.

There had been complaints that the policy measure might fuel rent seeking behaviour and corruption as foreign truck drivers might just engage locals to buy fuel on their behalf among other vices.

"On the truckers, where is your problem with the truckers? We have just laid down the law to say you will have to pay using US dollars, people can evade that, we need to think of enforcement mechanism but the principle of them paying in US dollars is a good one. The same for anyone coming to buy groceries, we are aware that our groceries are quite attractive because of prices we want to insist that they use US dollars but they might try to avoid that," said Prof Ncube.

"I cannot assure you that there will be no be leakages. There will be leakages, absolutely."

Prof Ncube defended levying of two cents per every dollar on every electronic financial transactions such as Real Time Gross Settlement or mobile money transfers saying that was meant to broaden the tax base. He said Government was prepared to review any policy if it failed to produce intended objectives. He was responding to concerns that the policy measures might affect ordinary persons as those that sell hard currency in the parallel market would simply raise the premium to cushion themselves.

"We are not the first country to do this. Every other country is doing it. In countries like Kenya these financial transaction tax are actually higher than what we are proposing. We have to change the way to collect our taxes, of course we will have an opportunity to review policies if it does not work, but for the moment we feel this is a good position to start with.

"We also recognised that the US dollars in Zimbabwe are floating all over the place, some of them being kept outside but goods and services are being enjoyed internally. This is evidence based policy making, let us see the impact and then we will adjust if it is not the best way to do it," he said.