Interbank market: Who is allowed to go front of the forex queue?

Zimbabwe currency
(REUTERS/Philimon Bulawayo)

With foreign currency on the new interbank market still a trickle, the Reserve Bank of Zimbabwe is pushing companies in the productive sectors to the front of the queue of forex buyers.

A directive issued to banks last Friday sets a list of payments that they should give priority to, a move that serves as sign that the market is still yet to find its feet.

For individuals seeking to make smaller payments, they will have to wait for bureaux de change to be up and running and for them to be funded. At banks, companies that need foreign currency will have to show invoices for goods and services that are on a priority list.

Below are some of the importers that get to be front of the line for foreign currency purchases:

Net exporters importing raw materials or machinery; non-exporting importers of raw materials and machinery for local production that directly substitute import of essential finished goods; imports of critical and strategic goods such as basic food stuffs and fuel, health and agro-chemicals granted these goods are not available locally (to be funded through letters of credit and allocations from the Allocation Committee), and repayments of offshore loans procured to fund productive activities.

Priority is also being given to payments for services not available in Zimbabwe; foreign investment (capital disinvestments, profits and dividends; remittance of rental income from properties owned by non-resident Zimbabweans and foreign investors that acquired the property using funds originating from offshore and transferred through normal banking channels; remittance of pension income for non-resident Zimbabweans who formally emigrated from Zimbabwe; importation of packaging material not available in Zimbabwe; university and college fees; mining consumables, and goods and services not local available for tourism operators.

A secondary category will get 30% of forex allocations. This category will include capital remittances from disposal of local property; capital remittances for cross border investments; funding of offshore credit cards, importation of trinkets, low local content consumer goods and/or goods readily available in Zimbabwe; payments for services available in Zimbabwe, and donations.

In terms of essential imports, foreign currency requirements for strategic imports such as fuel, electricity, water chemicals, medicines, cooking oil, and wheat shall be met through Letters of Credit facilities and support by the Foreign Exchange Allocation Committee.