Zimbabwe: RBZ Allots U.S.$38,7 Million

RESERVE Bank of Zimbabwe (RBZ) this week allotted a total US$38,7 million to support local companies at a time some retailers are accused of under-declarations of foreign currency sales.

A trading update released at the close of business Tuesday shows that out of the total allotted amount the Main Auction received US$29 million while the SME Auction received US$9,7 million.

Critical needs like raw materials purchases, machinery and equipment received US$12, 6 million and US$6,5 million on the Main Auction respectively.

The two priorities were also allotted US$3 million each on the SMEs platform.

Other priority needs included consumables, services, retail and distribution.

Meanwhile, a brief survey carried out by NewZimbabwe.com Business revealed that many retailers in the formal sector are continuing to produce local currency receipts despite having collected foreign currency payments.

The illicit business conduct risks exposing the economy to massive revenue losses in potential taxes which go uncollected due to the under declarations.

Efforts to get a comment on the matter from Zimbabwe Revenue Authority (ZIMRA) spokesperson, Francis Chimanda were fruitless as he remained mum on the issued questions.

Analyst at Ethos Capital Partners, Yona Menon blamed companies for taking advantage of the obtaining environment and urged regulators to up market surveillance.

“I think if the environment provides a viable opportunity for arbitrage, businesses will always exploit it. Financially, it means the retailers won’t have to pay their taxes in hard currency, which would lead to a saving if the forex is liquidated at the parallel rate,” he said.

Menon said to curb the illegal activities, responsibility now falls on relevant authorities to create surveillance and deterrent measures that make the arbitrage opportunity unviable.

“For retailers of significance, I think the Zimbabwe Revenue Authority has to closely monitor their finances, particularly cash flows and inventory procurement patterns,” he added.

Last year RBZ and ZIMRA warned companies against such greedy practices which have seen some companies double dipping as they access foreign currency at cheaper premiums but decide to retain their own earnings.