Government has set June 30 as the deadline by which State institutions, parastatals and local authorities should have embraced multi-currency arrangements in payment transactions to promote financial sector stability. The move is part of a plethora of measures introduced by Government through the Reserve Bank of Zimbabwe aimed at ensuring safety and soundness of the banking system and to alleviate the persistent liquidity challenges in the economy.In a circular released on Friday to accounting officers, Permanent Secretary in the Ministry of Finance and Economic Development Willard Manungo said Government ministries, departments, local authorities and parastatals are key players in the adoption of multi-currencies given the extent to which they transact with the public.
“In this respect, it is critical that such entities also adopt measures that facilitate restoration and promotion of the multi-currency system,” said Mr Manungo.
“Pursuant to the above, accounting officers are, therefore, required to urgently arrange for departments and institutions under their purview to embrace application of the multi-currency arrangement in payment transactions with the public,” he said.
Arrangements to be adopted include introduction of a multi-currency tier price structure that includes the South African rand and other currencies within the multi-currency system, alongside the US dollar and bond notes when introduced.
Government intends to introduce export incentives to be settled in bond notes backed by a $200 million Afreximbank facility.
The bond notes are expected also to ease
the current liquidity challenges and cash shortages.
Zimbabwe is facing a challenging cash shortage with most institutions limiting depositors to $100 maximum daily withdrawals.
Some banks are said to be limiting maximum withdrawals to $500 per week.
Government institutions and parastatals have also been instructed to accept payment in rands and other currencies using the prevailing exchange rate as publicised by the central bank from time to time.
Upon receipt of payments in rands and
other currencies, institutions will be able to open accounts with banks in respective currencies of receipt, transact or sell to the Reserve Bank.
“This dispensation will also be extended to other businesses including hotels on a voluntary basis. Institutions and departments will be expected to have embraced the multi-currency arrangements by June 30 2016,” said Mr Manungo.