HARARE – The Reserve Bank of Zimbabwe (RBZ) has uncovered a sophisticated practice by some of the country’s biggest corporations borrowing large sums of money from banks, which they then channel to the black market to buy foreign currency and manipulate exchange rates.
The companies then bought foreign currency, sold some of it on the black market (i.e. by burning) and quickly repaid the loans – some with two-year terms – within two months before refusing to get more loans now used to manipulate the exchange rate and the prices of goods and services.
Central Bank governor John Mangudya was quoted by The Sunday News saying many companies will soon be named and prosecuted for commercial financial crimes.
“Corporations borrowed large sums of money from banks and then used this money to manipulate the exchange rate.
“They would take the money today if there was a certain interest rate and in a month or two they would pay off the loan in full knowing that it has lost value compared to when they borrowed it.
“They served the loans by devaluing the currency, in other words, these units were “burnt”. They used the high level of borrowing for financial gain by manipulating the exchange rate, thereby devaluing the value of their loans,” said Mangudya.
However, the RBZ is in for a tussle with companies who have swiftly responded to the suspension of borrowing money from banks by putting on hold credit lines, a move set to affect the economy.
Companies such as Tongaat Hullet, Cresta Hotels and Surrey Group have since announced the suspension of credit facilities for customers and their suppliers.