BY HARRIET CHIKANDIWA MINERS say foreign currency auction system payment delays have negatively affected the sector.
Appearing yesterday before the Parliamentary Portfolio Committee on Budget and Finance to give oral evidence on the foreign currency allocation system, Zimbabwe Chamber of Mines president Isaac Kwesu said the foreign currency auction system failed to provide key sectors of the economy with the much-needed foreign currency to import critical raw materials.
“Over time, we observed that the auction market could not clear the backlogs of successful bids on time, an indication that the bids allocated were more than the available forex at the time of trade, or maybe the exchange rate discovery through auction was not reflective of the general market fundamentals,” he said.
“There was also a general belief that some business entities and speculators took advantage of the arbitrage opportunities that existed between the official exchange rate and the parallel market.”
Kwesu said as a result, miners continued to offload export proceeds at the official market, while local suppliers were pricing inputs at the obtaining parallel market rates.
“This means miners were losing value on the export proceeds equivalent to more than 20% of the 40% we surrender. We could only buy half of what our foreign currency would buy if using it to buy local inputs. This affected the viability of exporters and affected the ability of miners to meet their targets overtime,” he noted.
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