The pharmaceutical industry is abusing foreign currency auctions privileges by selling imported drugs using black market rates, and the Reserve Bank of Zimbabwe does not have the legal powers to stop them.
RBZ Governor Dr John Mangudya yesterday told Parliament’s Budget, Finance and Economic Development Committee that the bank was now asking Government to draft suitable legislation.
At present the RBZ cannot punish the perpetrators sufficiently in the absence of supporting legislation.
“We have requested Government that they give more teeth to our instruments. What we have at the moment is not deterrent enough,” he said.
Dr Mangudya said players in the pharmaceutical industry were some of the major culprits, who obtain foreign currency at the official rates, but were pegging medicines at black market rates.
He added that they could only suspend bidders from participating, using auction rules, but said the rules lack legal grounding to make them effective.
Dr Mangudya also told the Committee that RBZ will soon institute audits of entities that were selling commodities in foreign currency, but were not banking the proceeds, but continue to bid for allocations at the auction.
Under auction rules those with foreign currency holdings have to use these first before topping up with auction bids.
“We will this week publish another list of those who have benefited from the auction because this has also assisted us in identifying culprits who are abusing the auction as have received tip-offs from the public,” he said.
Early this month, RBZ suspended 12 companies that were allegedly involved in transfer pricing from the auction system on suspicion they were offloading some of the money on the parallel market.
The auction system was adopted last year and has been credited for bringing stability of prices of commodities on the market.