Treasury closes doors on blocked funds appeals

THE Treasury has said new appeals for the assumption of blocked funds by the Government from companies or individuals are no longer acceptable since the process was completed in 2020.

Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said this week this following the recent influx of companies or individuals appealing for the approval of blocked funds through the Reserve Bank of Zimbabwe and Treasury.

Blocked funds constitute debts and funds that companies or individuals incurred for the supply of goods and services by foreign entities and for which the central bank was unable to pay due to shortage of foreign currency.

“Treasury advises all companies, individuals, organisations and entities with blocked funds appeals that the process was completed in 2020 and that no new appeals will be considered.

Treasury has already completed the registration of all blocked funds and the validation of the same,” reads part of the statement.

It said the process of validation of foreign exchange applications submitted under the blocked funds framework announced in the Monetary Policy Statement on February 22, 2019 has since been completed and the claimants have already been dealt with through issuance of Treasury bonds and cash payments arrangements.

The Government, through Treasury, assumed the blocked funds under Finance Act Number 7 of 2021, which provided the list of claimants approved and registered by the Reserve Bank via the commercial banks of the claimants.

In July 2021, Treasury announced that it had started validating blocked funds which the Central Bank in 2020 estimated at over US$1,3 billion that could not be repatriated due to shortage of foreign currency for consolidation into national debt.

An update from the Treasury’s Debt Office at the time put the cumulative blocked funds figure at an estimated US$2,9 billion.

The legacy debts comprised in-country funds owed to foreigners after Zimbabwe changed its currency in 2019.

The process of changing the national currency conversion, which was undertaken as Zimbabwe’s US dollar liquidity woes mounted, was done in terms of statutory instrument (SI) 33 of 2019.

At that point all US dollar balances, the anchor currency under a multi-currency regime introduced in 2009 were converted to Zimbabwe dollars at the Reserve Bank of Zimbabwe prescribed exchange rate 1 to 1.

The country operated a US dollar-anchored multiple currency regime from 2009, after the local dollar unit was decimated by hyperinflation, until February 2019 when the Government reintroduced the domestic currency.