One indicator that things are not well in an economy is when companies are required to liquidate all their export proceeds. This has been a major requirement in Zimbabwe over the past one and half years or so. Exporters were required to immediately convert their 30% of their export proceeds at the official rate. The rest of the proceeds had to be utilised within 60 days upon which the remaining money would be forcibly liquidated at the prevailing official rate.
The RBZ has now eased those requirements. In their latest public notice they revealed that the following requirements would now apply:
- Exporters would no longer be forced to liquidate their foreign earnings within 60 days. We are assuming this means that they get to keep the money indefinitely within their accounts. This will be welcomed by a lot of companies who were struggling to meet their foreign currency requirements due to this rule.
- You have to remember that this does not mean exporters get to keep everything. To make up for this easing of rules, exporters will be required to immediately surrender (sell at the official rate not give away for free) 40% up from 30% of their proceeds
- Companies now also get to keep 80% of their domestic foreign currency sales excluding Sales Tax. The rest of the money has to be converted into local currency and the foreign currency sent to the RBZ for the Auction by an Authorised Dealer.
As always companies are still being required to heed to foreign currency priority list. The list prioritises productive imports namely
- Raw materials
- Consumables and
- Capital goods such as farm impliments
These imports are to be preferred over foreign currency requirements such as:
- Payment for foreign services (not clear whether this applies to specialised supports for items such as complex machinery)
- Education and
- Portfolio investments