By Alois Vinga
Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya has defended the apex bank’s recent decision to pay small scale gold producers 100 % foreign currency saying the move will assist in stabilising parallel market exchange rates.
In a recent interview with NewZimbabwe.com, Mangudya said the move by the central bank’s subsidiary, Fidelity Printers and Refiners (FPR) was aimed at decongesting the exchange rate markets.
“The newly gazetted US dollar payments for the small-scale miners are aimed at reducing the quantum of Zim-dollars chasing after scarce foreign currency on the black market.
“The small-scale producers do not have several operational costs payable in local currency. So, we have to avoid the risk of paying them in a form which will force them to buy foreign currency on the black market and in turn push up the exchange rates.”
FPR had all along been paying the producers 55 % of their dues in US dollars with the remainder being settled in local currency at the prevailing interbank exchange rate.
The central bank has since tightened screws on mobile money operators in a bid to tame the rampaging exchange rates which had seen US$1 fetching 75 Zimbabwean dollars the parallel market.
The rates however later came down to down to 1:53 at the close of this past week.
Under the new payment arrangements announced by the central bank, bigger gold producers shall be paid under a 70/30 US-Zim dollar arrangement.
Under the scheme, 70% of the gold sale proceeds shall be paid into producers’ Nostro accounts and the balance of 30% shall be paid into currency at the ruling exchange rate into their Zim-dollar accounts.
Said Mangudya, “This is because bigger producers have more expenses which they can pay for, using the local currency, therefore presenting a lower risk of flooding the black market.”
Meanwhile, Zimbabwe Miners Federation president, Henrietta Rushwaya has welcomed the development saying it was long overdue.
“We would like to appreciate the recent review by FPR in the gold trading framework as announced through its Press Statement of 26 May 2020. The review provides for a flat price of US$45/ gram delivered by small scale producers,” she said.