The Reserve Bank of Zimbabwe (RBZ) has released the new priority list for foreign currency payments with bias towards productive sectors as the country grapples with low foreign currency reserves.
The RBZ’s move is meant to allocate the little foreign currency available towards critical sectors of the economy ahead of non-essential payments.
The list has two categories with 70 percent of foreign currency to be channelled to category one and 30 percent allocated to category two.
“Accordingly, and consistent with Exchange Control Circular No.3 of 2020, Authorised Dealers and Bureaux de Change are advised that the attached Priority List for Foreign Currency Payments shall apply with immediate effect to ensure that foreign currency resources are substantially channeled to the productive sectors of the economy in light of the Covid-19 pandemic,” read the statement from the RBZ Exchange Control department.
Category one consists of importation of raw material , machinery and spare parts for local production, imports of basic foodstuffs and fuel, health and agro-chemicals, importation of packaging material, goods not locally available for tourism operations, medical consumables and fees, loan repayments, commercial vehicles and agricultural equipment, remittance of pension income for non-resident Zimbabweans who formally emigrated from the country, remittances of rental income from properties financed from offshore and university and college fees.
Category two consists of disinvestment proceeds and dividend remittances, capital remittances for cross border investments, capital remittances from disposal of local property, funding of offshore credit cards, payments for services not available in Zimbabwe and importation of other consumer goods not readily available in the country including non-commercial vehicles.
In the past the bank has lengthened the categories of the priority list resulting in delays in settlement of payments ranked the least in the pecking order.
Zimbabwe is facing serious foreign currency shortages that have seen most companies default payments to external suppliers.
Production in key sectors such as agriculture and manufacturing has drastically fell due to a host of reasons including anticated machinery and capital constraints.
This has in turn affected the country’s exports and foreign receipts.
