Zimbabwe in desperate need of foreign currency

Exporters would now have to sell 40% of their earnings to the central bank-run foreign currency auction.

12 January 2021 | Economics

Zimbabwe's central bank reversed a decision to force exporters, including mining companies, to sell a large portion of their dollar earnings if they were not used after 60 days.

Severe foreign currency shortages are the clearest sign of an economic crisis that has sparked intermittent shortages of fuel, power and medicines in the southern African nation.

Critics blame the crisis on financial mismanagement and corruption by the government of President Emmerson Mnangagwa. It says the economic troubles are caused by droughts as well as sanctions imposed by Western countries some two decades ago.

Reserve Bank of Zimbabwe governor John Mangudya said the bank's monetary policy committee had agreed "to remove the compulsory requirement to liquidate all unutilised export proceedings after 60 days, with immediate effect".

Exporters would now have to sell 40% of their earnings to the central bank-run foreign currency auction, his statement said. Previously, exporters were obliged to sell 30% but could only keep the rest for 60 days before having to auction it.

Mining companies, which generate the most foreign currency, have been lobbying the government to let them keep their dollars, saying this would encourage more investment.

The Chamber of Mines, which represents the biggest mining companies, did not immediately respond to requests for comment.

The government argues that it needs the foreign currency to buy fuel, medicines and food. – Nampa/AFP

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