ISSUANCE OF STATUTORY INSTRUMENT 127 OF 2021
DEPUTY MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHIDUWA): Thank you Mr Speaker for me this opportunity. I rise to make a Ministerial Statement of on the issuance of Statutory Instrument 127 of 2021. My Ministerial Statement provides the policy rationale on the issuance of Statutory Instrument 127 of 2021. My statement will cover the following critical areas of the S.I.: background, objectives and advantages.
The Financial Laws Amendment Regulations (S.I 127 2021) seek to address the gaps identified in the bank Use Promotion Act (chapter 24:24) and the Exchange Control Act (Chapter 22.05), to stabilise the exchange rate, promote use of the banking system as well as safeguard the banking system from being abused for illicit activities, by introducing administrative or civil penalties on delinquent individuals and corporate entities.
Mr. Speaker Sir, the President is empowered in terms of Section 2 of the Presidential Powers (Temporary Measures) Act[Chapter 10:20] to make such regulations when a situation arises which he considers needs to be dealt with urgently in the economic interests of Zimbabwe or the general public interest.
Regulations made under Presidential Powers are valid for six months to pave way for amendment of the aforementioned two Act through the normal process which involves the passage of the amendment Bills through Parliament. The Statutory Instrument seeks to:
ü Minimise arbitrage opportunities in the market;
ü Minimise abuse of the auction system
ü To provide a level playing field for business
ü To protect consumers; and
ü To enforce compliance, which is necessary for continues stability
Mr. Speaker Sir, the Statutory Instrument will empower the RBZ and the FIU to impose appropriate penalties on individuals or corporates where there is evidence of the following delinquencies:
ü Using foreign currency obtained directly or indirectly from a foreign exchange auction or an authorised dealer for a purpose other than that specified in the application.
ü Refusing to allow a buyer to tender payment for goods in Zimbabwean dollars at the ruling exchange rate
ü Failure to verify correctness of customer information by banks
ü Charging a price for goods/services above the auction rate or allowing a discount on foreign currency payments
ü Issuing of local currency receipts for a foreign currency purchase
ü Failure to open a bank account
ü Failure to avail to customers electronic means of payment
ü Failure to keep records
Mr. Speaker Sir, it is envisaged that implementation of the regulations will have positive impact through;
ü Consumer protection from abuse by unscrupulous businesses
ü Increased financial inclusion
ü Convergence of parallel and formal exchange rates.
Price stability of goods and services, customers will be able to settle payments of goods and services in either currency. The S.I. promotes market discipline which is a key anchor of the price and financial stabilisation strategies. The banning on cross-currency receipt issuances where goods are sold in USD$ would be receipted in ZW$ ensures that vulnerable consumers are protected. This is in line with standard Consumer Rights and expectations in the region and elsewhere. The widespread abuse of the auction platform through arbitrages will be eliminated by making sure that banks adhere closely to KYC and due diligence procedures. This will ensure that foreign currency is available to genuine importers and not speculators. Hon. Members, the implementation of this noble initiative will require the auction system to increase access of forex to more businesses.
Mr. Speaker Sir, after all has been said and done, these regulations have been promulgated to urgently maintain exchange rate stability, enforce compliance and market discipline in financial transactions thereby protecting the consumers. Exchange rates can be any figure but it does not generate forex. What is critical is production and the consolidation of stability which is critical for us to move forward as a country and is supported by genuine progressive corporates, organised labour and consumers. I thank you.