2. Remittances, other than dividends, by business entities to be made against invoices consistent with bills of entry collected by ZRA.

Transcription

1 ,, ;., Tel. (260 1) / BANK OF ZAMBIA P.O. Box 30080, f~: Fax: (260 1) LUSAKA ' r f~. January 23,2001 CB Circular No. 08/2001. L;' f. i..new To: All Commercial Banks and Financial Insiuions Dear Sirs, MEASURES ON FOREIGN EXCHANGE TRANSACTIONS ; Furher o he announcemen of January 18, 2001 by he Miniser of Finance and (: Economic Developmen on he above subjec, we wish o formally inform you of he new measures ha have a direc bearing on your operaions (copy of he Miniser's press saemen is aached). To assis you in your operaions, he Bank of Zambia has oday issued wo circulars on Foreign Exchange Risk Exposures and Foreign Exchange Placemens and Deposis. Appropriae sauory insrumens and guidelines for he oher areas will also follow shorly. Meanwhile, you are all urged o make necessary adjusmens o your operaional procedures and inform your cusomers of he same. The new measures are as follows. GENERAL MEASURES 1. All expors o be receiped locally and a leas 75% of his amoun should be deposied wih local banks immediaely upon receip bu in any case no exceeding 180 days from dae of exporing. To his end, wih immediae effec declaraion of he commercial bank processing he expors on he exising Cusoms and Excise Declaraion (CED) form is mandaory. f L.r: ZRA has already effeced his change o he CED form. Exporers will herefore be approaching banks for faciliaion. Bank of Zambia will be following up wih collecion of his informaion on a regular basis hrough submission of regular reurns. 2. Remiances, oher han dividends, by business eniies o be made agains invoices consisen wih bills of enry colleced by ZRA. Business eniies wishing o make remiances will be required o furnish banks wih invoices or supporing documenaion. This procedure is principally for saisical purposes. The role of banks is merely o faciliae his process by.

2 l.-: ensuring ha cusomers' remiance papers are in order and no o approve or disapprove remiances. 3. All exernal paymens above US $5,000 o be channeled hrough commercial banks. Business eniies and members of he public wishing o make exernal paymens r-: i: in excess of US $5,000 will be required o channel such paymens hrough banks. f.:'i Again, banks will be expeced o playa faciliaive role only. c r,. 4. Holding of foreign currency deposis shall coninue, bu foreign currency demand deposis will be limied o 25% of he oal foreign currency deposis o allow acive inermediaion by he banks. 5. Only foreign exchange dealers auhorized by Bank of Zambia will be allowed o price in foreign currency, receive, buy or seil foreign exchange. 6. Auhorised foreign exchange dealers o: 1;.allow margins, beween buying and selling raes, of no more han 2%, (.inclusive of commissions and oher charges; and.display heir curren rading raes and only ransac a hese raes. 7. All domesic ransacions o be charged and seled in Kwacha, excep for licensed ouris enerprises auhorized by Bank of Zambia. 8. In line wih he concerns raised by he business communiy a Sae House,..cc Governmen will review all pieces of enabling legislaion wih a view o srenghening hem. r~;~,.2.2 PRUDENTIAL MEASURES 1. Foreign exchange open posiions for commercial banks o be reduced from 25% o 15% of paid up capial Foreign exchange holdings by commercial banks wih relaed paries, single 11 couner-paries and unrelaed couner-paries o be sreamlined o ensure ha no more han 5% of such holdings are held in off-shore ceners.,.. : 3. The procedure for processing applicaions for bureaus has been made more rigorous so ha only repuable persons are involved in his business..applicans for licenses o operae bureaux mus demonsrae possession of capial of no less han US $10,000 before a license can be issued. In addiion, a ~'C7 non-refundable applicaion fee ofus$i,ooo and an annual license renewal fee..of US $2,000 will be required. For exising bureaus, a grace period of 3.

3 , c I: monhs has been given for hem o raise heir minimum capial o i:,;..'. US$lO,OOO.Cusomer idenificaion o be inensified. All bureaus will be required o adop some elemens of ''Know Your Cusomer guidelines issued by he Bank of Zambia. r-, :.To ensure ha bureaus remain moneychangers, heir ransacions will be limied o hose ransacions befiing money shops. To achieve his, bureau ransacions will be sp'. \,:. 4. Unsound and unsafe pracices by banks and bureaus will arac siff money and oher penalies. f Finally, non-observance of above regulaions and provisions in he relevan Ac(s) 1 will arac siff money and oher penalies. i f, I ;' ~ 1; Yours faihfully, (-:..\ J,;' i~~ Abraham Mwenda (Dr) DEPUTY GOVERNOR -OPERA nons f' \. f;:'. ;- : : -' \--

4 \.: v' MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT STATEMENT ON GOVERNMENT MEASURES To STABILIZE THE FOREIGN EXCHANGE MARKET 18 January INTRODUCTION f: Governmen believes ha in general, he economic programme has progressed well. f\ However, during he course of las year, a worrying rend begun o emerge in he economy wih regard o he conduc of he privae secor owards foreign exchange ransacions. The Governmen h~ observed, among oher hings, ha: a. Exporers are exernalizing heir proceeds and leaving very lile wihin he Zambian economy. {; b. Banks have exhibied noable relucance o inervene in he foreign exchange r' marke despie having foreign currency deposi holdings of over US $200 million.! c. Major exporers are aucioning foreign currency insead of off-loading i hrough! esablished channels and oules. f' \ d. Far oo many business ransacions are being carried ou in foreign currency. e. Many business eniies and individuals are soliciing and acceping paymens in foreign currency, which hey laer sell a speculaive exchange raes. f. A large number of business esablishmens are denominaing prices of heir goods and services in US Dollars and convering hese ino Kwacha a speculaive v', exchange raes. '..'. Vi.foreign i g. A number of business esablishmens are carrying ou large cash ransacions in currency, apparenly, wih a view o exernalizing foreign exchange from he domesic economy. L h. There has been a endency among our people o use Bureaux de Change for exernalizing foreign exchange and for oher unsound pracices. When suspending exchange conrols, Governmen's inenion was and sill is o eliminae unnecessary barriers for privae business and our people o be able o mobilize resources ~ c and underake invesmen in he domesic economy so as o promoe growh and reduce, povery. The endencies oulined above are evidence ha unhealhy speculaion and abuse cc. of liberalized environmen are violaing he inenions of Governmen. 2.0 MEASURES Before going ino he measures, I wish o express Governmen's sincere appreciaion of ~- he healhy dialogue ha is emerging beween he business communiy and he 1

5 ; ;, ;. Governmen, as exhibied a he second Sae House meeing of January 17,2001 (Sae House Consensus) on his subjec. I is Governmen inenion o coninue his ype of dialogue, which is aimed a srenghening Governmen policy for he benefi of our people. The measures I am abou o announce, ake ino accoun he suggesions and senimens expressed a Sae House and are principally aimed a bringing some immediae relief o he pressure on he Kwacha. For hese measures o work Governmen r. couns on he business communiy's expressed commimen o cooperae wih.: Governmen in his very imporan maer for our counry. Governmen reaffirms ha hese measures are consisen wih he curren policy of no exchange conrols. However, Governmen is deermined o ensure ha he Moneary Auhoriy correcs eviden marke failures..2.1 GENERAL MEASURES,. ~ 1. All expors o be receiped locally and a leas 75% of his amoun should be i, deposied wih local banks immediaely upon receip bu in any case no exceeding 180 days from dae of exporing. To his end, wih immediae effec declaraion of f? he commercial bank processing he expors on he exising Cusoms and Excise I: Declaraion (CED) form is mandaory. 2. Minisry of Commerce, Trade and Indusry o urgenly se up a pos-privaisaion naional monioring commiee o follow up on an on-going basis implemenaion of developmen agreemens. ~; I 1.5. c 3. Remiances, oher han dividends, by business eniies o be made agains invoices consisen wih bills of enry colleced by ZRA. 4. All exernal paymens above US $5,000 o be channeled hrough commercial banks. Holding of foreign currency deposis shall coninue, bu foreign currency demand deposis will be limied o 25% of he oal foreign currency deposis o allow acive inermediaion by he banks. 6. Only foreign exchange dealers auhorized by Bank of Zambia will be allowed o price in foreign currency, receive, buy or sell foreign exchange. ~ ; 7. Auhorised foreign exchange dealers o:,. :,. 8 allow margins, beween buying and selling raes, of no more han 2%, inclusive of commissions and oher charges; and 8 display heir curren rading raes and only ransac a hese raes. 8. All domesic ransacions o be charged and seled in Kwacha, excep for licensed ouris enerprises auhorized by Bank of Zambia. 2