Chapter

ZIMBABWE

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
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Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: February 5, 1995.
Exchange Arrangement
CurrencyThe currency of Zimbabwe is the Zimbabwe dollar.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementOn March 31,1999, the exchange rate was pegged, de facto, at Z$38 per US$1, as the result of an agreement between the monetary authorities and the main commercial banks. Technically, however, the monetary authorities have not announced a formal pegging of the rate. Thus, the exchange rate system of Zimbabwe has been reclassified to the category conventional pegged arrangement from the category independently floating.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
A rrangements for Payments and Receipts
Prescription of currency requirementsAll payments by nonresidents to residents must be effected in any of 17 currencies freely convertible through authorized dealers, with the exception of payments otherwise specified or effected through nonresident accounts.
Payment arrangements
Bilateral payment arrangements
OperativeThere is an arrangement with Malaysia.
Administration of controlExchange control is administered by the Reserve Bank of Zimbabwe (RBZ) under powers delegated to it by the MOF. Authorized dealers have been empowered to approve certain foreign exchange transactions.
International security restrictionsNo.
Payment arrears
OfficialYes.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeNo person, either as principal or agent, may deal in or possess gold unless that person is (1) the holder of a license or permit; (2) the holder or distributor of a registered mining location from which gold is being produced; or (3) the employee or agent of any of the persons mentioned in (1) and (2) above and authorized by an employer or principal to deal in or possess gold that is already in the lawful possession of such employer or principal. A mining commissioner may issue to any person a permit authorizing the acquisition, possession, or disposal of any gold, provided the quantity does not exceed one troy ounce. In all other cases, permission can be issued only by the Secretary for Mines.



Three types of licenses may be issued under the terms of the Gold Trade Act: a gold dealing license, a gold recovery works license, and a gold assaying license. Each holder or distributor of a registered mining location is required to lodge to the holder of a gold dealing license, not later than the tenth day of every month, all gold won by him from his mining location, except any gold for which the Minister or mining commissioner has given him special authority to deal in otherwise. Any person intending to smelt gold or any article containing gold must first obtain a license issued by a district commissioner under the terms of the Secondhand Goods Act that authorizes the possession of smelting equipment.
Controls on external tradeThe exportation of gold in unmanufactured form is controlled and licensed by the Ministry of Mines; these controls do not apply to the RBZ. No export licenses for gold are issued. The importation of gold is controlled by the Gold Trade Act, which requires those intending to import gold into Zimbabwe to meet certain requirements.
Controls on exports and imports of banknotes
On exports
Domestic currencyTravelers may take out, as part of their travel allowance, up to Z$2,000.
Foreign currencyAs part of their travel allowance, travelers may annually take out up to the equivalent of US$500 a day for business travel and up to US$5,000 for holiday travel. Nonresident travelers may take out the traveler’s checks they brought in, less the amount they sold to authorized dealers. Upon departure, nonresident travelers may reconvert unspent Zimbabwean currency into foreign currencies on presentation of exchange certificates.
On imports
Domestic currencyA traveler may bring in up to Z$2,000.
Foreign currencyForeign currency and traveler’s checks may be imported without restriction but must be sold or exchanged in Zimbabwe only through authorized dealers or foreign exchange bureaus.
Resident Accounts
Foreign exchange accounts permittedResident individuals may open foreign currency accounts in one of the denominated currencies in local branches of authorized dealers. Funds in these accounts are traded at market-determined exchange rates. Funds withdrawn from these accounts and converted into local currency, however, may not be redeposited in the account, except in the case of the amount of the initial investment and income or capital gains from investments in listed companies on the stock exchange or money market accounts.
Held domesticallyYes.
Held abroadThese accounts may be opened, but approval is required.
Accounts in domestic currency convertible into foreign currencyA resident may only convert funds in a domestic account into foreign currency when purchasing traveler’s checks for holiday travel payments.
Nonresident Accounts
Foreign exchange accounts permittedThese accounts may be credited with foreign currencies, with payments from other nonresident accounts, or with payments by residents that would be eligible for transfer outside Zimbabwe. Nonresident accounts may be debited for payments to residents, for payments to other nonresident accounts, or for payments abroad. Nonresident individuals may open foreign currency accounts in one of the denominated currencies in local branches of authorized dealers. Funds in these accounts are traded at market-determined exchange rates. Funds withdrawn from these accounts and converted into local currency, however, may not be redeposited in the account, except in the case of the initial investment, and income or capital gains from investments in the stock exchange.
Approval requiredYes.
Domestic currency accountsYes.
Convertible into foreign currencyNonresidents may only convert domestic currency accounts into foreign currency when emigrating and taking out their surplus earnings.
Approval requiredYes.
Blocked accountsOnly former residents residing outside Zimbabwe may maintain emigrants’ accounts in Zimbabwe. Cash assets held in Zimbabwe in the names of emigrants must be blocked in these accounts, and all payments to and from these accounts are subject to various exchange restrictions.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance payment requirementsAuthorized dealers were allowed to approve advance payments for imports up to US$50,000. Effective January 2, 2000, authorized dealers are no longer permitted to effect advance payments for imports without prior RBZ approval.
Documentation requirements for release of foreign exchange for importsAuthorized dealers may approve applications to effect payments for authorized imports, provided the necessary documentation is submitted. Payments for imports into Zimbabwe may not be made in domestic currency through a local nonresident account.
Domiciliation requirementsYes.
Import licenses and other nontariff measuresThere are no import-licensing requirements. Imports of certain goods (mostly agricultural and processed food products) require a special permit issued by the Ministry of Lands and Agriculture.
Negative listThe negative list for imports includes, in addition to items restricted for health or security reasons, nonmonetary gold, pearls, precious and semiprecious stones, and some jewelry items.
Open general licensesYes.
Licenses with quotasNo quotas are in force, but seasonal restrictions are applied to certain agricultural products.
Import taxes and/or tariffsThe customs duty regime consists mainly of ad valorem duties, which range up to a maximum of 100% for luxuries with a surtax of 10% on finished goods, and specific duties on a number of products. Generally, imports are subject to an additional tax (between 12.5% and 20%) equivalent to the sales taxes imposed on goods sold domestically. Government imports and capital goods for statutory bodies are exempt from customs duties. On August 13, 1999, the import surcharge was decreased to 10% from 15%.
State import monopolyMaize may be imported only by the Grain Marketing Board or by others with the permission of the Board. Petroleum is imported by the National Oil Company.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsUntil August 1999, exporters were required to sell export proceeds in the market within a specified period. Effective August 9, 1999, exporters are allowed to retain 100% of their export proceeds in foreign currency accounts for 60 days; following that period, the foreign exchange must be sold in the market.
Financing requirementsGoods may not be exported without permission unless the customs authorities are satisfied that payment has been made in an approved manner or will be made within three months of the date of shipment (or a longer period if permitted by the RBZ).



Payments for exports must be received in foreign currency transferred into Zimbabwe through the banking system, except when there are special arrangements.
Documentation requirements
Letters of creditYes.
DomiciliationYes.
Export licenses
Without quotasExport licenses are required for the following: (1) any ore, concentrate, or other manufactured product of chrome, copper, lithium, nickel, tin, or tungsten; (2) petroleum products; (3) jute and hessian bags; (4) road or rail tankers for carrying liquids or semiliquids; (5) bitumen, asphalt, and tar; (6) wild animals and wild animal products; (7) certain wood products; (8) ammonium nitrate; and (9) armaments. Export-licensing requirements are imposed for reasons of health and social welfare, as well as to ensure an adequate domestic supply of essential products. Export permits are required from the Ministry of Lands and Agriculture for some basic agricultural commodities, including maize, oilseeds, cheese, milk, seeds, potatoes, citrus fruits, apples, bananas, and tomatoes.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersForeign exchange to pay for invisibles related to imports and, within certain limits, for other purposes is provided by commercial banks under delegated authority. Applications for foreign exchange exceeding the limits established for commercial banks are approved by the RBZ, which deals with each case on its merits.
Trade-related payments
Prior approvalRequired for payment of commissions.
Quantitative limitsThe limits for freight and insurance are 30% of f.o.b. value of goods transported, but for goods that are of exceptional mass in relation to value, up to 80% of the f.o.b. value may be approved. For commission, the following limits apply: (1) conforming commission—up to 2.5% of c.i.f. value; (2) buying commission—up to 5% of f.o.b. value; (3) foreign travel agents—up to 10% of sales; and (4) selling commission—up to 7.5% of f.o.b. value.
Indicative limits/bona fide testYes.
Investment-related paymentsAll in vestment-related transfers are subject to prior RBZ approval.
Prior approvalRequired for payment of profits and dividends. Specific applications are submitted to authorized dealers for approval without reference to the RBZ.
Quantitative limitsA corporation may be authorized to remit by way of dividends to foreign shareholders, including dividends due to former residents of Zimbabwe, up to 100% of the corporation’s net after-tax profits, provided that an application for the remittance of a dividend is submitted to an authorized dealer within 12 months from the end of the financial year in respect of which the dividend is payable.
Indicative limits/bona fide testYes.
Payments for travel
Prior approvalYes.
Quantitative limitsThe basic foreign exchange allowance for travel is US$5,000 a year a person regardless of age. The basic foreign exchange allowance for business travel is up to US$500 a day.
Indicative limits/bona fide testYes.
Personal paymentsRemittance of pensions of former residents is guaranteed under the constitution.
Prior approvalWith RBZ approval, foreign exchange is provided for education abroad beyond the secondary school level for certain diploma and degree courses.
Quantitative limitsFor medical treatment, the limit is US$20,000 a trip for the patient and one companion. A travel allowance up to US$250 a person a day may be allowed. For studies abroad, the limit is US$50,000 a year, and the annual limit is US$2,000 for alimony and child support payments.
Indicative limits/bona fide testApplications for additional amounts must be submitted to the RBZ for approval.
Foreign workers’ wagesExpatriate workers may remit their monthly salaries, subject to RBZ approval.
Prior approvalYes.
Quantitative limitsAmounts of up to a third of gross salary may be remitted.
Indicative limits/bona fide testYes.
Credit card use abroad
Prior approvalYes.
Quantitative limitsCredit cards may be used abroad for holiday and business travel only, up to the limits set for those transactions.
Indicative limits/bona fide testYes.
Other payments
Prior approvalYes.
Quantitative limitsThe annual limit for subscriptions for a company is US$20,000.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsReceipts from invisibles must be sold to authorized banks within a reasonable period of time.
Restrictions on use of fundsOnly surplus funds are required to be repatriated through the banking system.
Capital Transactions
Controls on capital and money market instrumentsInward transfers of capital through normal banking channels are not restricted. Outward transfers of capital are controlled.
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsForeign investors are permitted to participate in the Zimbabwe Stock Exchange (ZSE) using currency received in Zimbabwe through normal banking channels. The initial investment plus any capital gains and dividend income may be remitted without restriction. Foreign investors may also subscribe for up to 35% of primary issues of bonds and stocks. Nonresidents are not permitted to purchase bonds and stocks from the secondary market.
Sale or issue locally by nonresidentsNonresident investors are allowed to sell their bonds and stocks in the secondary market.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Bonds or other debt securities
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
On money market instruments
Purchase locally by nonresidentsFormer residents holding blocked assets and new emigrants are allowed to invest their funds in government external bonds with a maturity of 12 years and an annual interest rate of 4%.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
On collective investment securities
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Controls on derivatives and other instrumentsNo derivative transactions with foreign currency implications are permitted.
Controls on credit operations
Commercial credits
By residents to nonresidentsYes.
To residents from nonresidentsThe limit on foreign borrowing without prior approval of the External Loans Coordinating Committee is US$5 million. Gold producers undertaking new expansion projects are permitted access to offshore financing in the form of gold loans.
Financial credits
By residents to nonresidentsResidents are not permitted to provide credit to nonresidents without RBZ approval.
To residents from nonresidentsYes.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Controls on direct investment
Outward direct investmentThese investments require RBZ or MOF approval on a case-by-case basis.
Inward direct investmentDirect foreign investment in various sectors is subject to the prior approval of the Zimbabwe Investment Center, normally with the following conditions: (1) up to 100% foreign ownership is allowed in the following priority sectors: manufacturing, mining, quarry and mineral exploration, and development of hotels for tourism; (2) up to 70% foreign shareholding is permitted in specialized services such as management consultancy and construction, etc.; and (3) a maximum of 35% foreign ownership (reserved sector list) is allowed in selected sectors where foreign investors wishing to participate may only do so in joint-venture partnership with Zimbabwean firms or individuals. The reserved sector list is as follows: (a) primary production of food and cash crops; (b) primary horticulture; (c) game, wildlife ranching, and livestock; (d) forestry; (e) fishing and fish farming; (f) poultry farming; (g) employment agencies; (h) estate agencies; (i) valet services; (j) armaments manufacture, marketing, and distribution; (k) public water provision for domestic and industrial purposes; (1) rail operations; (m) grain mill products; (n) bakery products; (o) sugar products; (p) tobacco packaging and grading; and (q) tobacco products.
Controls on liquidation of direct investmentEffective April 1, 1999, all foreign investments, irrespective of their source, that have been undertaken through normal banking channels since May 1993, may be repatriated. In all cases, specific applications must be submitted to the RBZ in respect of repatriation of capital. Repatriation at accelerated rates that depend on discounted sale prices of net equity is allowed for investments effected before 1979.
Controls on real estate transactions
Purchase abroad by residentsYes.
Purchase locally by nonresidentsYes.
Controls on personal capital movements
Loans
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Settlement of debts abroad by immigrantsYes.
Transfer of assets
Transfer abroad by emigrantsApplications for emigrant status must be submitted to the RBZ; the settling-in allowance that emigrants may remit abroad is limited to US$1,000 a person or US$2,000 a family. In exceptional cases, the exchange control authorities will consider applications exceeding this maximum. All those applying for emigrant status are required to liquidate their assets within six months and to invest the total proceeds, less any settling-in allowance granted, in 4%, 12-year Zimbabwe government external bonds. If emigrants are unable to comply with the six-month limit, the matter may be referred to the RBZ.
Transfer of gambling and prize earningsLottery prizes due to nonresidents may be transferred, except the first prize.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadBorrowing abroad is subject to exchange control rules and regulations and the External Loans Coordinating Committee.
Maintenance of accounts abroadMaintaining accounts abroad is subject to exchange control rules and regulations.
Lending to nonresidents (financial or commercial credits)Lending to nonresidents is subject to exchange control rules and regulations. However, it is usually not permitted.
Lending locally in foreign exchangeThese transactions are subject to exchange control rules and regulations.
Purchase of locally issued securities denominated in foreign exchangeYes.
Differential treatment of deposit accounts in foreign exchangeThere are rules that allow for differential treatment of local exporters and companies operating in the export promotion zone.
Reserve requirementsYes.
Liquid asset requirementsYes.
Interest rate controlsYes.
Credit controlsControls apply to mortgage rates of building societies.
Investment regulations
Abroad by banksInvestment abroad by local banks in offshore entities is subject to exchange control approval.
In banks by nonresidentsAcquiring equity by nonresidents in local banks listed on the ZSE is subject to the ZSE’s rules and regulations. For banks not listed in the ZSE, these are subject to exchange control approval.
Open foreign exchange position limitsAuthorized dealers are subject to overnight net foreign currency exposure limits. The net open position limits of foreign exchange dealers is US$2 million or 10% of their capital base, and their capital requirements are 5% (core/Tier I) and 10% (total capital).
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investorsLocal institutional investors are not permitted to invest in securities registered offshore.
Limits (max.) on securities issued by nonresidents and on portfolio invested abroadYes.
Limits (max.) on portfolio invested abroadYes.
Limits (min.) on portfolio invested locallyPurchase of shares by foreign investors is limited to 40% of the total equity of the company, with a limit of 10% for one investor. These limits are in addition to any existing foreign shareholdings in the companies.
Currency-matching regulations on assets/liabilities compositionYes.
Other controls imposed by securities lawsNo.
Changes During 1999
Exchange arrangementMarch 31. The exchange rate arrangement of Zimbabwe has been reclassified to the category conventional pegged arrangement from the category independently floating.
Imports and import paymentsAugust 13. The import surcharge was decreased to 10% from 15%.
Exports and export proceedsAugust 9. Exporters were allowed to retain their export proceeds in foreign currency accounts for 60 days.
Capital transactions
Controls on liquidation of direct investmentApril 1. The policy allowing the creation of 12-year and 20-year 4% government bonds out of blocked profits accruing on pre-1993 investment was abolished.
Changes During 2000
Imports and import paymentsJanuary 2. Authorized dealers are no longer permitted to effect advance payments for imports without prior RBZ approval.

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