IPEC optimistic on forex business regulations
Zimbabwe’s pensions and insurance companies, will soon be able to carry out business in foreign currency, with the sector regulator — the Insurance and Pensions Commission (IPEC) — indicating that the long-awaited regulations could be promulgated this week.
Pension funds and insurers are some of the entities that have been hardest hit by value erosion in times of hyperinflation, and they have been lobbying Government to allow them to trade in foreign currency across their entire value chain.
IPEC Commissioner Dr Grace Muradzikwa, told participants at a virtual Zimbabwe Association of Pension Funds (ZAPF) annual conference that the requisite regulations could be in place by the end of this week.
“We are hoping that the draft Statutory Instrument on Foreign Currency Business will be gazetted this Friday. The SI is to provide for payment of contributions, investments and benefits in forex, and the measure is meant to ensuring asset liability matching,” said Dr Muradzikwa.
“Forex business will expect to be reported strictly in forex for supervisory purposes as well.”
Promulgation of the upcoming SI was largely expected earlier this month as Government moved to empower IPEC to collect levies in foreign currency, through Statutory Instrument 268 of 2020, Exchange Control (Exclusive Use of Zimbabwean Dollar for Domestic Transactions) (Amendment) Regulations, 2020 (No.3) which amended part of the Exchange Control Act.
Part of SI 268 of 2020 reads: “Section 4 of the Exchange Control (Exclusive Use of Zimbabwe Dollar for Domestic Transactions) Regulations, 2019, published in Statutory Instruments 212 of 2019, is amended in paragraph (b) by the insertion, after sub-paragraph (vi), of the following sub-paragraph — “(vii) charging of any levy payable in relation to insurance business conducted in foreign currency or pension and provident funds business whose contributions are made in foreign currency in terms of an enabling law or authorisation by the exchange authority;”.
SI 268 comes ahead of an expected amendment in the regulations that will allow insurers and pension funds to write business in foreign currency.
The local pensions and insurance industry, like most businesses in the country, has been struggling with the attendant effects of a raft of monetary and fiscal policy changes over the last couple of years, but particularly from last year.
The country reverted to the exclusive use of the Zimbabwe dollar last June from a multi-currency system that had been adopted in 2009.
The Zimbabwe dollar was re-introduced through Finance Act No.2 of 2019 and Statutory Instrument 212 of 2019, which provides for exclusive use of the Zimbabwean dollar to settle all domestic transactions as well as penalties for failure to do so.
But adjustments have since been made to allow for US dollar transactions, alongside the Zimbabwe dollar, through Statutory Instruments 85, 185 and 196.-heral.cl.zw
