Proplastics bemoans foreign currency auction market delays

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Extruder of polyethylene for process production of plastic bags
  • Its backlog stretched to two months
  • The Group tied any possible future growth on forex market
  • Companies are expected to get funds within 14 days
  • RBZ promised to clear backlog within a month

Harare – Zimbabwe Stock Exchange (ZSE) listed plastics pipe and fitting manufacturer, Proplastics has urged the RBZ to improve the allotment of funds on the foreign exchange auction market to companies on time to promote economic growth in the country.

The government is targeting to achieve an upper middle income class by 2030, a move which is expected to be tied on manufacturing sector and electricity generation through the provision of highly demanded foreign currency to import raw materials and curtail the parallel market rate.

In a statement accompanying the half-year financials released by the Group for the period ended 30 June 2021, chairperson Gregory Sebborn said, “During the period under reporting, the disbursement of foreign currency on the auction platform continued to lag behind despite the liquidation of the local balances at the time of participation.”

“We urge the authorities to address this matter with urgency as the massive delays are now a huge performance hindrance for industries and the economy at large.”

The Group said backlog at the end of the period stretched to almost two months and arrears to foreign creditors stood at USD1.7 million.

Inspite of allotment delays, the Group tied any possible growth on foreign currency availability on the auction market.

“In addition, further delays in settling allocated amounts will result in the worsening of the Group’s foreign currency exposure” and Sebborn added, “The position exposes the Group to huge exchange rate risks as well as negative impact on supplier relations.”

Meanwhile, the press statement released by the RBZ last week on Friday showed that the auction system’s foreign currency allotments have surpassed Interbank market payments by 27%, a development which proves that the auction platform has become a dependable source of foreign currency for companies.

The foreign exchange auction market was introduced by the government in June last year to provide foreign currency to the business and determine the country’s exchange rate in a bid to curtail market instability that was driven by skyrocketing parallel market exchange rates in June last year.

At its latest data, RBZ said it owes US$175 million to the auction market which it promised to clear within thirty days.

 Equity Axis News

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