Tobacco producers to get more forex

Zimbabwe’s central bank has ordered that all tobacco farmers be entitled to retain an extra 5 percent of foreign currency earnings from their produce, in a bid to boost production.
“Beginning next season, the 20 percent forex retention scheme for tobacco farmers has been

increased to 25 percent,” Gono said in a monetary policy statement delivered late on Monday. “All outstanding FCA (foreign currency account) entitlements would be fully settled before 31 October this year.”
Tobacco is the country’s top foreign exchange earner. The bank has introduced the new rules in an effort to control foreign exchange leakage and help build up the country’s almost non-existent forex reserves.
Due to the long-running foreign currency exchange shortages in Zimbabwe, the tobacco industry has experienced severe price distortions in recent years.
Some merchants were capitalising on the forex shortages, changing their money on the parallel market where one US dollar fetches around Z$500, local units while the official exchange rate is Z$30,000 units to one greenback.
To cushion themselves from the effects of the foreign currency problems, tobacco growers are calling for a devaluation of the local currency to Z$300,000 units to the US dollar.
The last bales of tobacco went under the hammer last week, with 71 million kilograms reported to have been sold in this season. – Chief Reporter

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