THE Reserve Bank of Zimbabwe (RBZ)’s Financial Intelligence Unit (FIU) has ordered Harare City Council to cancel its plans to charge residents in United States dollars with immediate effect.

Last week, the local authority announced its intention to start charging residents in foreign currency for on-demand services like surveys and business services.

In a letter addressed to acting town clerk Antony Taruvinga, the FIU said the local authority was in violation of the RBZ Exchange Control Act.

“As per our telephone conversation, the FIU has noted that the city council has advertised to charge some city council fees exclusively in US dollars,” the FIU said.

“This is a violation of the Exchange Control Act which warrants a penalty if implemented.

“The Unit is advising you to cancel this arrangement with immediate effect and comply with the laws of the nation..

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“You are hereby requested to respond on a letterhead to these allegations explaining your position and indicating that you have cancelled this illegal arrangement.”

The local authority had earlier made an announcement highlighting payment modalities around the new US dollar fees structure.

“The fees exclude charges that are accessible through monthly bills like water consumption, sewage, refuse collection and rates,” council said in a statement.

“The above mentioned charges will remain open to being payable using multi-currency as may be opted by the client.”

Council had said the US dollar tariffs would remain as contained in the 2022 approved budget or schedule 25A.

Innocent Ruwende, the council spokesperson said there were no reasonable grounds for the city council to stop charging in US dollars considering the current operating environment.

“What we are charging is on demand services like survey, business services and the council like any other business is operating in this hyper inflationary environment and we are suffering the same way,”  Ruwende said.

“ So there is no need for the council to stop charging in US dollars while others are charging in the same currency because of the operating environment.”

Treasury on the other hand has directed all government ministries, departments and agencies to collect all fees and levies in local currency.

Local authorities were also included in that circular.

“Any collection of fees and levies for services rendered in foreign currency by government ministries, departments and agencies, as well as local authorities, is illegal and should be in local currency at the prevailing interbank rate, unless granted exceptional approval by the treasury,” Finance and Economic Development permanent secretary George Guvamatanga said.

Guvamatanga, citing the law, said: “Section 78 (1) of the Public Finance Management Act (CAP 22:19), empowers treasury to prescribe or issue instructions or directions to ministries, whether individually or collectively, concerning the determination of any sales of fees, other charges or rates relating to revenue accruing to the Consolidated Revenue Fund.”

Officially, the government says Zimbabwe will use a dual currency system for the foreseeable future owing to the instability of the local currency that was reintroduced in 2019 after a decade of dollarisation.