New Rule on Nostro Accounts Illegal: Biti

Staff Reporter

The Reserve Bank of Zimbabwe (RBZ) has resolved to tighten regulations on withdrawals of foreign currency by Zimbabweans who earn their salaries in foreign currency.

However this development faces litigation on the part of the the Reserve Bank with some analysts saying the move would result in people moving their money to offshore accounts, a repetition of what occurred during the soaring and failed economy of the year 2008.

A leaked FBC Bank instruction circular indicated that the RBZ will be demanding written requests from people who earn in United States dollars for them to withdraw their money while banks will also be ordered to convert all unutilized bank balances not withdrawn in one’s nostro foreign currency account within 30 days from day of deposit to local currency using the prevailing interbank rates.

RBZ governor, Doctor John Mangudya confirmed the new developments saying the document would deal with funds from exporting companies but ex-Finance minister Mr Tendai Biti criticized the move describing it as illegal as it contravene section 71 of the Constitution.

Biti said, “Government and the RBZ cannot be experts in doing lawless things because all these are desperate actions by a desperate, despicable regime. You cannot have a government that generates the suffering of its people on a day to day basis. Besides, this issue is unlawful and unconstitutional because a salary is protected by section 71 of the Constitution and no one has a right to appropriate anyone’s salary as this will simply force companies and employees to relocate their accounts offshore to countries like Botswana, Zambia and South Africa.”

Section 71 of the Constitution speaks on property rights, which includes pensions, annuity, gratuity, and similar allowances, and it states that any person anywhere in Zimbabwe has a right to acquire, hold, occupy, use, transfer, hypothecate, lease or dispose of all forms of property, either individually or in association with others.

Biti further argued; “This is foolishness being done by government which is desperate for foreign currency and they are now trying to grab every dollar of forex. We are generating about US$5 billion from our exports and so the issue is that the money is being spent by thugs and crooks.

The issue is how government is using the foreign currency. Actually, forex must be credited to the Consolidated Revenue Fund and Parliament must be the one to distribute foreign currency through the Appropriation Account.”

One Economist Kipson Gundani had this to say that, “Clearly, we have got a monetary regime which is transitioning from a dollarized environment into a mono-currency environment of the Zimdollar and what the authorities are then trying to do is to avoid a big-bang approach, where you overhaul things and overnight there is an effect.

They are now trying to give precedence to bonafide United States dollar earners, but it distorts the market. If one is to access the US dollar and they access it through the banks, then they will be tempted to open off-shore accounts. These are some of the unintended effects that will happen if at all this is operationalized.”

The move by RBZ has been also likened to former RBZ governor Gideon Gono’s era in 2008 when he raided foreign currency accounts belonging to private businesses and foreign aid organizations to sustain troubled government ministries.

In 2009, many then opted to stash their forex abroad and in 2017, Ashok Chakravarti, an adviser to government on the ease-of-doing business called for an investigation into the externalization of funds, as it had emerged that US$5 billion could have been siphoned out of the country since dollarization in 2009.

Image Source: The Zimbabwe Mail

Nyari Mashayamombe

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