“The Reserve Bank of Zimbabwe will soon be closing all US based and South African Rand accounts replacing them with bond notes following indications of massive foreign currency shortages in the economy.”
Are you shocked by the headline you have just read? This is an inevitable headline yet to hit most sponsored and state controlled media houses as the nostro situation continues to go south.
RBZ however maintains that this would not mark the introduction of the much loathed Zimbabwean dollar currency but is rather an adoption of a locally usable “steady and stable currency.” Indications are high that government will soon be making this announcement as they run out of ideas on how to replenish the lost or “stolen” nostro accounts balance.
The shocking news announced recently by the RBZ governor Dr John Mangudya during his monetary policy indicates that the country has $250 million in nostro accounts and $120 million in physical cash at banks, while they estimate that $600 million is circulating informally in the economy.
Standard Charterd bank has come out open that it can no longer sustain the foreign currency demands while FBC bank has blocked their standard master card and refused to accept bond notes as deposit for the prepaid mastercard.
Dr Mangudya recently announced that a substantial amount of $206 million for card transactions was paid through nostro accounts between July and December in 2016. This is an average $500 million per year in a tightly controlled environment, meaning Zimbabweans could have doubled the figure without restrictions against a paltry $250 million in the national nostro account.
This is a red alert! The future is bleak!
Since RBZ took over the banks’ Nostro accounts,the national account has diminished massively to the extent that the government is failing to pay the promised public service bonuses and introducing weird policies recently announced by the RBZ governor John Mangudya as they desperately try to replenish the low US based account.
Tobacco and Gold are the major foreign currency earners in Zimbabwe but these are failing to sustain the demand as the coffers continue to run low.
Dollarisation of Zimbabwe bank accounts took place in February 2009. The economy for once was moving in the right direction till government withdraw millions from bankers nostro accounts , which they cant replenish and are now announcing funny policies and blaming citizens for externalization.
The RBZ is continuously running low on nostro accounts as telecoms company and exporters keep pressuring the broke RBZ to settle their Telegraphic Transfers, Online settlements and international visa/mastercard transactions.
The Reserve Bank of Zimbabwe was reported to have arranged a nostro stabilisation facility of $70 million, which will be disbursed to banks by the end of this month.The nostro stabilisation facility is expected to deal with current delays in the processing of outgoing payments for the procurement of productive imports and raw materials.
This figure is still too low compared to what Zimbabweans are actually transacting.
Dr Mangudya said total foreign currency cash receipts for 2016 amounted to $5,4 billion compared to $6,2 billion received during the same period in 2015, representing about 13,6 percent decline in liquid foreign currency supply.
The government has no continuous foreign currency supply to stop the implosion except to print more bond notes and force Zimbabweans to use these locally as they desperately try to stabilise the nostro account and limit any unnecessary payments outside Zimbabwe.
DSTV transactions alone are said to have costed the nation $206 million adding a headache to the government.
“The RBZ is enforcing market and institutional discipline and “domesticating” the settlement of local card transactions on international card switches.
Dr Mangudya said this measure has been necessitated by the need to ensure that nostro accounts are used for foreign payments and that domestic transactions are settled locally through platforms such as RTGS, ZimSwitch, VISA, Mastercard, local mobile banking and/or cash and bond notes.”reported the Herald.
He said using nostro accounts to settle domestic transactions put unnecessary pressure on the country’s foreign exchange reserves that should ideally be used for international or offshore payments.
However, it still remains nonsensical since Zimbabwe is not running its local currency, there is no point in localising transactions when you are using real foreign currency, unless of course the whole RTGS system is now running on fake US dollar equivalent.
The only way out will be to completely domesticate the transactions and do it the Standard Chartered way where any foreign currency transaction will need to be vetted and approved via the impossible export priority list, which is slowly crushing SMEs who rely on exports to run their business.
Millions will soon completely avoid putting their foreign currency if the RBZ does not become transparent on the nostro account status and bond note printing as this is a real threat to viability of any business.