The Reserve Bank of Zimbabwe (RBZ) does not know the amount of foreign currency the country is losing in illicit dealings annually. According to information from the RBZ; of the country’s foreign currency earnings, an unspecified amount is siphoned out of the system illegally.
Imports account for a whopping 82 percent of the foreign currency followed by capital remittances at 14 percent.
Of the drainers income payments account for 2 percent. While there is a remaining balance of 2 percent, Dr Chipika said the amount of foreign currency flowing out of the country due to illegal transactions could not be quantified, indicating the country could be losing more.
Indications from the RBZ also show that the country is losing an unquantified tonnes of gold to illicit trade.
“We are worried about illicit financial flows, there is a lot of money which is unaccounted for in the country which is moving by all sorts of means. Help us to manage efficiently this hard earned money, which we are all surviving on,” she told bankers at an Institute of Bankers of Zimbabwe (IOBZ) conference recently.
Dr Chipika said there had been pressure on the central bank to further tighten screws on foreign currency management, but said this was detrimental to the economy.
The apex bank manages only 30 percent of the country’s export receipts while the rest is left at the local banks’ jurisdiction.
“There is a lot of talk on how we manage our foreign currency, yes we have to manage, we cannot just leave everything to the free market given the way we generate foreign currency.
“Others ask why we don’t bring all the foreign currency to the central bank, but once we do that, we close the economy. That will damage the confidence of this economy even more. The moment we are perceived as a controlled economy it is bad,” she said.
“We need to work closely with banks to manage this foreign currency, the bulk of which is in banks,” she said.
Although the RBZ is working on measures to reduce leakages through illicit capital flows, transfer pricing, externalisation and importation of non-essentials, Dr Chipika appealed to banks to assist the central bank in plugging loopholes in the system that fuel foreign currency leakages.
Of the country’s total foreign currency earnings, export receipts account for 60 percent while international remittances make up 28 percent of the earnings. International remittances includes Diaspora, non-governmental organisations, embassies and other international organisations.
External loans make up 8 percent of the foreign currency while income receipts and foreign direct investments make up 3 percent and 2 percent respectively. Foreign investments includes investment income and royalties earned from offshore.