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Zimbabwe Imposes Capital Controls to Stem Currency Depreciation

Zimbabwe's central bank has banned third country foreign payments, except for fuel, in measures to facilitate critical transactions to keep the economy going smoothly and encourage remittance of export proceeds back to the country.

"Banks shall with immediate effect not process third-party country foreign payments," President Emmerson Mnangagwa said, referring to payments made to an entity overseas via another country. "Third-party foreign payments are susceptible to illicit financial flows which prejudice the country of its hard-earned foreign currency resources," the president said.

The new measures also reverse the government's propensity toward the U.S. dollar which had the effect of undermining the local currency reintroduced in February 2019. The state pays in part its employees salaries and Covid-19 allowances in the American currency.

Meanwhile, Zimbabwe has lifted its ban on bank lending, more than a week after the government froze loans in a move it said was meant to stop speculation against a rapidly devaluing local currency. The government said at the time it had started investigating unnamed speculators of taking out Zimbabwe dollar bank loans to purchase foreign currency on the black market, driving the local currency's value lower.

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