Zimbabwe Central Bank Backtracks on Real Estate Currency Control Measure
Zimbabwe's central bank said it had decided to suspend and review the measure placing property sale receipts in escrow
Reserve Bank Exchange Control Chief Morris Mpofu said the order was suspended so that the institution could address misconceptions about the policy, which banks and real estate agents vehemently opposed The Reserve Bank of Zimbabwe has backtracked on a recently announced currency control which obliged those selling immovable property to put all but the first US$50,000 revenue from the sale on deposit with the central bank for as long as one year. The central bank said it has decided to review the measure. In a statement, Reserve Bank Exchange Control Chief Morris Mpofu said the order was suspended so that the institution could address misconceptions about the policy. He did not spell out the supposed misconceptions. But the Bankers Association of Zimbabwe and the Real Estate Council of Zimbabwe had strongly objected. The policy, intended to slow hard currency outflows, would have paid out money held in escrow in four payments over a year’s time, with interest of 10 percent. Mpofu said the suspension of the order should not be misconstrued as opening the flood gates for currency outflows. The order was mainly aimed at foreign investors. “Authorized dealers are further advised that in the normal course of (the) exchange control’s monitoring and surveillance activities, the on-site and off-site inspections shall continue to be conducted regularly,” Mpofu said. Oswald Nyakunika, president of the Real Estate Council of Zimbabwe, commended the RBZ for suspending the policy which he said had unsettled the property market. Economist James Wade said the RBZ had no choice as real estate agents and bankers viewed the move as a strategy to compel deposits which many doubted would be safely held, given the bank’s record of diverting the funds of depositors. In 2008 the Reserve Bank was embarrassed by disclosures that it had diverted millions in funds placed on deposit by the Global Fund to Fight AIDS, Tuberculosis and Malaria, leading to the suspension of Zimbabwe grants made by the Fund.