The Sunday Mail
THE Reserve Bank of Zimbabwe has regularised US$23 million in offshore loans since the announcement of a conditional amnesty for companies that had not notified the monetary authority of money sourced outside the country to finance local operations.
The country’s exchange control regulations require all external loans to be registered with the RBZ.
To allow for full accounting through formal regularisation of unauthorised offshore loans, the RBZ granted a 90-day conditional amnesty for companies to register their external loans with Exchange Control Division.
RBZ Governor Dr John Mangudya revealed in his maiden monetary policy statement that there was rampant flouting of exchange control regulations under the guise of cross-border investments.
He gave firms keeping foreign currency in foreign accounts 90 days to reduce these holdings from 30 percent to 5 percent.
“Exchange Control is inundated with requests for recapitalisation on the same non-performing unauthorised offshore investments. In some cases, offshore investors have falsely attributed the non-repatriation of dividends to the need to recapitalise their failing investments.
“The Reserve Bank is fully aware that some investors continue to externalise foreign currency earned from these offshore,” said Dr Mangudya.
Authorities are, however, unsure of the exact amount of loans contracted from offshore sources.
“Since the announcement of the conditional amnesty, which was effective 1 September 2014, Exchange Control has regularised offshore loans that are in the region of US$23 million. More work still needs to be done for the market to comply with the Amnesty. To this end, the Reserve Bank is embarking on public awareness initiatives through both the print and electronic media.
“The exact number of companies that have contracted external debts without Exchange Control cannot be determined in advance since both the authorised dealer and Exchange Control only get to know of the existence of such transactions upon request for repayment by the borrower.
“The total value of unregistered loans is difficult to ascertain as some of the loans are received as cash or in the form of goods and the borrowers have not yet sought registration, whilst some only surface when the borrowers want to repay,” said the RBZ.
The apex bank noted that the bulk of unregistered loans were provided in the form of shareholders loans from stockholders spread across the globe.
According to the RBZ Economic Quarterly Review, only US$7,9 million from the approved US$706,3 million in private sector offshore loans has been accessed by the productive sectors since January. This represents a loan access rate of 1,67 percent.
Dr Mangudya added that some companies were claiming that they were paying for imports, which imports never materialised for duty payment purposes.
He said this meant these companies were “making false payments”, implying in turn “illegal externalisation of foreign currency” by importers and general economic indiscipline.
The RBZ boss demanded that in cases where there were “no imports being sourced” the funds be repatriated.
The central bank said due to the risk premium levied on Zimbabwe by external lenders, the country’s sources of lines of credit had been restricted to traditional institutions domiciled in Africa such as Afreximbank, AfDB, PTA Bank, as well as in China.
Exchange control regulations require resident corporates to register or get approval for all offshore lines of credit they contract.
For loans amounting to US$7,5 million, corporates apply for approval from authorised dealers (banks), who consider these based on set Exchange Control Guidelines for External Borrowings (ECOGEB) for processing of external borrowings.
The banks in turn register approved loans with the RBZ Exchange Control Division.
For external loans above US$7,5 million, companies are required to apply through banks for prior exchange control approval.
The Reserve Bank has a Computerised Exchange Control Batch Application System (CEBAS) that records all payments made offshore through local banks and — through this — it has come to light that some companies seek to repay loans that would not have been approved or registered.
Banks also highlight these cases through applications for registration of loans in retrospect.
