No more new appeals for blocked funds – Mthuli

Finance, Economic Development and Investment Promotion Minister, Professor. Mthuli Ncube said on Wednesday that Government will no longer accept new applications for release of blocked funds.

He said registration of applications for the release of blocked funds was concluded in 2020, and processing of these had begun, according to a statement the minister issued.

Mthuli was reacting to an influx of new applications for release of blocked funds from individuals and companies.

He said the new applicants will not be entertained due to time lapse.

“Please kindly note that the application for the approval of Blocked Funds was completed in 2020. Treasury has already completed the registration of all Blocked Funds and the validation of the same,” he said.

Blocked funds refer to money that the owner could not take out of the country for various regulatory reasons, in the majority of cases due to lack of foreign currency.

The government assumed responsibility for Block Funds, which are essentially debts, through Finance Act No 7 of 2021, and is now in the process of validating all the claims lodged.

Recently Government said it started issuing US dollar-denominated Treasury Bills (TBs) to corporates as compensation for outstanding blocked funds, according to people familiar with the matter.

The first batch of zero-coupon TBs worth nearly US$50 million were reportedly issued to about 10 companies at different maturity periods ranging from three years to 12 years, a senior official with the Reserve Bank of Zimbabwe (RBZ) told Business Weekly.

“The Treasury Bills are tradable and have prescribed asset status,” the official, who declined to be identified, because he is not authorised to talk to the media, said.

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Calls seeking comment from central bank governor Dr John Mangudya and Mthuli were not answered.

But an official with the Finance Ministry confirmed “a directive was recently” given to the RBZ to issue the Treasury Bills and “more will be issued soon.”

In July 2019, after the introduction of the interbank rate and conversion of bank balances to Zimbabwean dollars, the central bank assumed the foreign debts of some corporates.

The funds relate to external obligations that could not be remitted between January 2016 and February 2019 due to foreign currency shortages.

The debt was assumed on the condition that corporates would surrender their Zimdollar balances at 1:1.

This occurred about five months after the interbank market, which started with an opening exchange rate of 2.5/US$1 on February 22, 2019, had been introduced. As a result, the debts were assumed at a lower rate than what was prevailing at the time.

Early last year, the Government released 580 names of companies and individuals whose funds could not be repatriated out of the country, with CBZ emerging as the most exposed entity.-ebusinessweekly