In a major climbdown the Reserve Bank of Zimbabwe (RBZ) has indefinitely suspended the implementation of recently introduced policy measures requiring proceeds from disposal of immovable property valued at $50 000 or more to be paid in tranches.
The measures, meant to enhance foreign exchange monitoring, management and improving market liquidity remittance of sale proceeds from disposal of immovable property, had ruffled feathers on the property investment market.
The measures took effect on August 1 amid an outcry from property dealers.
RBZ senior division chief (exchange control) Morris Mpofu said on Monday the suspension of the measures would give the central bank ample time to address various misconceptions on the policy.
“This suspension should not be misconstrued as the opening of the floodgates for the externalisation of funds or the liberalisation of the capital account. Authorised dealers shall note that, for balance of payments (BOP) purposes, the capital account remains restricted,” Mpofu said.
“Authorised dealers are further advised that in the normal course of Exchange Control’s monitoring and surveillance activities, the on-site and off-site inspections shall continue to be conducted regularly and shall include inspection of these remittances.”
Critics said the suspension of the policy was a welcome development as it was likely to have created an “underground” property market.
Mpofu said balance of payments reporting purposes authorised dealers should upload property related transactions on the computerised exchange control batch application system within 24 hours of transfer of funds.
Under the policy, banks were compelled to pay sellers of immovable property in tranches after an initial $50 000 payment.
Upon selling property worth over $50 000, the seller will not be paid the whole amount of the cost of the property, but an initial payment of $50 000 would be transferrable at once after all statutory deductions, and the remainder would be paid over one year.
In his Mid-Term Monetary Policy Review, RBZ governor Gideon Gono said it was important that due to tight foreign exchange liquidity conditions in the domestic market exacerbated by absence of BOP support, the capital account remained regulated.
“In order to manage capital outflows which impact negatively on the BOP position and liquidity on the local market, remittances arising from disposal of immoveable property by residents shall be remittable in tranches over a one-year period,” Gono said.
Under the regulations only permanent emigrants with approved formal emigration, deceased estates whose beneficiaries were resident outside Zimbabwe and individual foreigners with documentary proof of transferring funds into Zimbabwe for the purchase of immovable property, were eligible to get 100% remittance of their sale proceeds at once.