Government tightens leash on illegal foreign currency traders

by | Oct 7, 2021 | Local News | 0 comments

Amanda E N Jojo

Government has introduced various measures to curb the illegal trade in foreign currency and indexation of goods and services at black market exchange rates to contain the spike of exchange rates which is currently being witnessed.

The resurgence of these practices have been identified as significant contributors to price instability in the economy.

The new measures will see businesses that disregard the law and continue pricing their goods on parallel market rates losing their licenses.

Minister of Finance and Economic Development Professor Mthuli Ncube said the practices are imposing downside risks to macro-economic stability and also contributing to erosion of domestic  and  international competitiveness.

“A residual core foreign currency demand, fuelled mainly by speculative, and store of value demand for currency on one hand as well as criminal and money laundering acclivities has perpetuated and sustained the parallel market for foreign currency,” Ncube said.

The result has been that despite large and small corporates, SMEs and individuals having access to the RBZ auction system, the existence of parallel market has provided an opportunity for price benchmarking at illegal market rates.

The central bank is working closely with Financial Intelligence Unit (FIU) in a process of identifying and prosecuting perpetrators of parallel market activities.

“The Zimbabwe Revenue Authority (ZIMRA) will be carrying out impromptu audits of corporate activities with a view of quantifying potential tax liabilities arising out of illegal foreign currency.

“The ZIMRA will also be carrying out compliance Audits with respect to compliance with the Location Tax introduced during the 2021 fiscal year,” Ncube said.

He further stressed the capacity of the FIU and other law enforcement agencies to investigate and prosecute violations of the Bank Use Promotion Act.

“Regulatory bodies including the Public Accounts and Auditors Board, will also be working on a framework to impose appropriate financial and professional sanctions on the members of the accounting, auditing and other professions who may be complicit in superintending over illicit affairs by corporate entities which they are charged with running,” he added.

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